Levi Posts Profit as Sales Gain in Quarter
Levi Strauss & Co. reversed a year-earlier loss and boosted its sales in its fiscal first quarter, marking a modest step in the long-struggling clothing maker’s turnaround efforts.
The San Francisco-based company said Tuesday that net income was $47.3 million for the three months ended Feb. 27. That contrasted with a $2.4-million loss at the same time last year.
Much of the difference stemmed from a $54-million charge that Levi absorbed as part of last year’s financial headaches. Levi’s accounting charges totaled just $3 million in this year’s first quarter.
Sales for the period totaled $1 billion, a 5% improvement from a year earlier. If not for sales gains from the weak dollar overseas, Levi said its sales increase would have narrowed to 2%.
The company said its long-term debt rose to $2.32 billion on Feb. 27 from $2.25 billion on Nov. 28, the end of the previous quarter.
Levi is privately held but discloses its financial results because some of its debt is publicly traded. The 152-year-old company is controlled by the Haas family, descendants of Levi Strauss.
Once one of the world’s top-selling brands, Levi has fallen on hard times as lower-priced rivals and a slow response to shifting fashion tastes have wiped out $3 billion, or more than 40%, of the company’s annual revenue since 1996.
This year’s early progress bolstered hopes that a reorganization engineered last year by turnaround specialists Alvarez & Marsal had positioned Levi to end its long stretch of financial decay.
“Fundamentally, the business is in the best shape that it has been for seven years,” Levi President Phil Marineau said Tuesday.
Still, Marineau, who became Levi’s chief executive in 1999, isn’t confident enough to predict that the company will halt its eight-year streak of declining sales.
He is worried that rising gas prices will pinch consumers, prompting them to spend less on clothes this year as they scramble to make ends meet. The recent sale of Sears, Roebuck & Co. and Mervyn’s and the announced sale of May Department Stores Co. also are raising anxieties about possible store closures and reduced merchant demand for Levi’s products.
“We are seeing a challenging and uncertain retail environment,” Marineau said.
Europe and Asia accounted for the bulk of Levi’s first-quarter sales gains. Europe revenue climbed 10% to $296.4 million while Asian sales rose 18% to $155.7 million. The company’s North American sales declined 1% to $553.8 million.
In the U.S., the Dockers brand -- a casual clothing line that Levi considered selling last year -- provided one of the bright spots in the first quarter, with sales up 4% to $147.2 million.
