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Levi Reports Loss in Quarter

Apparel: The results reflect costs associated with closing eight plants and continued slow sales.

June 21, 2002|From Reuters

Levi Strauss & Co., maker of Levi's jeans and Dockers slacks, reported a net loss for the second quarter because of costs involved in closing eight manufacturing plants and continuing lower sales.

The net loss of $80.9 million, which contrasted with net income of $43.4 million a year ago, came as the company struggles to restore its faded image after more youth-oriented brands cut into its once-dominant market share. Excluding the one-time restructuring charges, profit fell 65% to $15 million.

Sales at Levi Strauss, one of the world's largest apparel companies, fell 12% to $923.5 million, led by weakness in Europe amid stiff competition from lower-priced jeans. Sales growth in Asia offered a sign of encouragement, the company said.

Chief Executive Phil Marineau said Levi Strauss had expected a rough quarter but is optimistic that its turnaround plan would mean better sales in the second half of the year.

"The quarter results reflect many of the initiatives that put us in a position to be more competitive than we have been in years," Marineau said. "As we go forward, sales will stabilize and begin to grow in 2003."

Some analysts, however, were less certain that Levi could meet its targets given the tough retail environment.

Since sales started sliding in 1997, Levi has shut 30 plants in North America and seven in Europe, cut more than 18,000 jobs and sought to transform itself into a marketer from an apparel manufacturer.

These figures include factory closures announced this year, although some will operate through September.

Levi promised a revamped product line-up, including its own lower-priced jeans and Dockers khakis in Europe and a jeans line in the United States.

Marineau also said Levi would kick off an advertising blitz for new khaki pants he described as a "stain defender" that protects even against red wine spills.

San Francisco-based Levi is a private company but releases financial results because its debt is registered with the Securities and Exchange Commission.

It had $1.86 billion of debt at the end of May, down from $1.96 billion at the end of fiscal 2001.

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