NEW YORK, Jan 18, 2003/ — Despite a drop in fourth quarter profits, jeans maker Levi Strauss & Co. reported Monday that the company is happily riding the waves of its foray into updated looks and trends. Citing such new products as low-rise jeans and khaki pants treated with a stain defender, Levi enjoyed a slight two to five percent gain in sales in the second quarter.
But net income in the fourth quarter, which ended November 24, dropped from $63 million in 2001 to $45 million. Although a privately-held company, Levi is required to report earnings because of outstanding corporate debt. The San Francisco-based denim giant blamed a “higher effective tax rate and the impact of the currency volatility” for the profit fall.
The decrease didn’t seem to worry CEO Phil Marineau who said, “We ended 2002 right where we planned.” Thanks to a turnaround plan that began in 1999, fourth quarter net sales grew two percent from $1.23 million last year to $1.26 million. Had currency rates remained constant at 2001 levels, net sales would have increased approximately one percent for the period.
Adding to the success of Dockers Go Khaki with Stain Defender, which promises to prevent red wine, grape juice and other colored liquids from ruining the pants, Levi hopes to continue its rise with the launch of its new Type 1 jeans and an introduction of a lower-priced brand of jeans and clothing to sell at Wal-Mart stores. This union will be the first step into the discount market for the brand recognized by its familiar red tabs.
In its attempt to transform itself from an apparel manufacturer to marketer, Marineau said the brand intends to focus on a growing women’s business that will hopefully help boost sales in 2003. “Market-leading product innovation, strong retail and marketing programs, and improved execution are driving better performance.”
And although gross profit dropped $4 million, one thing the company was glad to see fall was its debt level, which dropped $114 million to $1.85 billion. Since sales started sliding in 1997, the firm has shut down 30 plants in North America and seven in Europe, cutting more than 18,000 jobs.