Levi May Shut Some Scottish, U.S. Plants
Levi Strauss & Co. may close two plants in Scotland, firing 647 workers, and an undetermined number of U.S. factories as fourth-quarter profit at the closely held maker of Levi’s jeans and Dockers slacks fell 16%.
Levi’s eight U.S. plants employ about 4,400 workers, spokeswoman Linda Butler said. The company’s 21 worldwide factories employ about 9,000, Chief Financial Officer Bill Chiasson said.
San Francisco-based Levi expects to close the Scottish plants in the second quarter after talks with unions, Butler said.
Chief Executive Phil Marineau has cut inventory and lowered debt to pare costs as annual sales fell for the fifth straight year in 2001 after reaching a record in 1996. He has introduced commercials such as the “belly button” spot featuring the new Superlow jeans to help lift sales. Levi’s sales have been hurt as retailers reduced orders on concern about the slowing U.S. economy, analysts said.
“The company is doing what it needs to do in order to position itself for stabilization,” said James-Scott Wong, a fixed-income analyst at Barclays Capital in London.
If the plant closings take place, Levi will take a charge in the first or second quarter, Chiasson said. The company plans to talk with its bankers next week to revise debt covenants as a result of the proposed shutdowns, he said.
Levi, which got a U.S. patent in 1873 for adding reinforcing rivets to denim pants, releases financial results because its debt is registered with the Securities and Exchange Commission.
Butler wouldn’t say how many jobs would be cut in the U.S. Levi employs about 16,750 worldwide, she said.
Net income in the fourth quarter ended Nov. 25 fell to $63 million from $75.4 million in the year-ago period, the company said in a statement. Sales fell 4% to $1.23 billion from $1.29 billion.
Annual sales fell 8.3% to $4.26 billion, the company said.
Other California companies reporting earnings Wednesday: :
* Genentech Inc. reported operating profit of $106.3 million, or 20 cents a share, an increase of 27% from the fourth quarter of 2000. Revenue at the South San Francisco biotechnology company increased to $600.2 million from $485.3 million, exceeding analysts’ forecasts of $227 million.
* Newhall Land & Farming Co. reported that net income fell to $14.2 million, or 57 cents a share, from $76.5 million, or $2.83 a share, a year ago. Revenue at the Valencia-based real estate company fell 72% to $76.7 million.
* Jacobs Engineering Group Inc. said net income rose 29% to $25.9 million, or 94 cents a share, for its fiscal first quarter, as revenue grew 11% to $1.03 billion.
