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Levi Strauss' 3rd-Quarter Sales Increase 3.5%

Apparel: Advance is jeans maker's first quarterly gain since 1996. But earnings fall on higher tax rate and bonuses.

September 24, 2002|LESLIE EARNEST | TIMES STAFF WRITER

Levi Strauss & Co. on Monday reported its first quarterly sales advance since 1996--a 3.5% third-quarter increase--but said earnings dropped 9% as costs rose.

The San Francisco-based jeans maker, which has been in a turnaround mode for the last three years, said the results show that the company is gaining ground as it introduces new products and works more effectively with retailers.

The earnings drop was linked partly to a higher tax rate and higher bonuses paid to employees as Levi Strauss met its goals, spokeswoman Linda Butler said.

The company is privately held but reports its financial statements because it has publicly traded debt.

Levi Strauss, which in addition to its namesake brand also makes Dockers, said it expects to log growth in annual sales next year.

"Based on strong retail orders and consumer sales, we're encouraged about the fourth quarter," Chief Executive Phil Marineau said. "Despite the sluggish economic and retail conditions worldwide, we're on track to stabilize sales by year-end, positioning us for growth in 2003."

For the third quarter ended Aug. 25, the company reported net income of $14 million, down from $15 million in the comparable period last year. Sales advanced to $1 billion, compared with $984 million in the third quarter of 2001.

Had foreign currency rates stayed constant at 2001 levels, sales would have risen about 1% for the period, the company said.

In Europe, where Levi has shown sales growth in five of the last six quarters, the company said it has been more aggressive with price promotions because of competitive pressures there.

Levi also said that its total debt rose to $1.96 billion as of the end of the quarter, compared with $1.86 billion at the end of the second quarter, partly because of seasonal working capital needs.

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