NEW YORK, Mar 20, 2002/ — Levi Strauss has reported a 47 percent increase in first-quarter net income, rising to $44 million from $30 million last year, mostly due to decreased interest costs and foreign exchange rate gains.
However, the company hasn’t yet managed to emerge from an alarming five-year trend of slumping sales. After reporting an eight percent sales drop for the fiscal year, to $4.26 billion, last January, Levi has now announced that its sales fell 6 percent in the first-quarter of 2002. They are down to $935 million, compared to $996 million in the first quarter of 2001.
Sales were weakest in the U.S., with a decline of 9.2 percent. They also fell 4.7 percent in Asia, but actually rose 1.3 percent in Europe. Another troublesome area for Levi is its reported end of quarter debt: At $1.96 billion, the figure stands stagnant from last year.
CEO Phil Marineau is not discouraged though. “We still anticipate some bumps in the road over the coming months, but we expect to stabilize sales worldwide by the end of the year. We hit the first-quarter operational and financial goals that we set for ourselves,” he said in his statement.
Levi Strauss began designing a reconstruction program nearly two years ago to deter a sales slump that has been compounded by the invasion of brands like Diesel, Earl and Tommy in the denim market. Announcing its intention to close plants in Scotland and the U.S this past January, Marineau said the decision was part of an initiative to transform Levi into a “marketing and product-driven” company.
Marineau is hoping that his company’s new spring offerings will help affect this turnaround. He revealed today that, “jeans with vintage-inspired finishes and stretch fabrics for women are performing well throughout the world. We’re seeing excellent rates of sale in the U.S. for Levi’s Flyweight jeans for men, which were featured in our Super Bowl ad, ‘Crazy Legs.’ And in the Dockers brand, consumers are responding well to the Mobile Pant and new styles of Capri pants.”