Weak Sales Expected to Lower Profit at Levi
Levi Strauss & Co., which is closing plants and laying off workers to cope with sluggish demand for its famed blue jeans, expects lower profit this year due to weak sales, a top official said Wednesday.
Carl Von Buskirk, president of Levi Strauss Europe, said in an interview in Brussels that sales and profit in Europe and for Levi worldwide would be lower than in 1997.
“Is our business off, ’98 to ‘97?” he asked in discussing the company’s European operations. “Yes, it is.”
Asked if that were true for the company worldwide, he said, “Yes, it is. I can safely say our profits would be off.”
Sales worldwide were expected to fall 10% for the fiscal year ending next month, from a year earlier, he said. He would not elaborate on the expected decline in profit.
San Francisco-based Levi Strauss had 1997 sales of $6.9 billion, including $4.6 billion in North and South America and $1.8 billion in Europe. The closely held company, the world’s largest apparel maker, does not disclose earnings. Sales peaked in 1996 at about $7.1 billion.
Levi Strauss Europe said two weeks ago that it would close three plants in Belgium and one in France because of sluggish demand, a move that would cut about 1,500 jobs. That came after it announced it would close two plants and cut 991 workers in the United States.
Levi, struggling with overcapacity for the last year, said in November that it would shut 11 U.S. plants and slash its North American work force by 34%.
While Levi has been increasing sales of products outside its traditional markets, the increase has failed to offset the decline in sales of blue jeans.
Levi Strauss Europe on Wednesday rejected proposals from employees to save the three Belgian plants, saying their plans had been considered but would increase costs.
“We’re proposing to close these factories because of overcapacity,” Von Buskirk said. “We’re making more jeans than the market demands.” Of its 12 plants in Europe, Levi targeted the Belgian and French plants because of their high operating costs.
