Blog: Tough brands for tough times
Leonie Barrie | 15 April 2009
The bankruptcies of retail customers like Goody's and Mervyns, and the negative impact of a strong US dollar on international sales have taken their toll on Levi Strauss, even though they are outside its control.
The San Francisco jeans maker has just posted a 12% drop in net revenue for the first quarter of 2009 to $951m and a 51% cut in profit to $48m.
Speaking on the company’s investor call, CEO John Anderson said: “The retail environment remains difficult globally. Europe, in particular, has become very challenging and Asia is beginning to soften as well.
“We are seeing weaker competitors struggle in this environment and we are ready to step in and take share whenever opportunities arise. It will be a tough year, but we are taking the challenge head on.”
Nowhere is this more evident than in Europe, where quarterly revenues tumbled 19% to $267m – although stripping out the effect of currency fluctuations, this fall would have been down to 6%.
While sales dropped in both its wholesale and branded retail channels, the company believes its ongoing retail expansion in the region partially offset lower sales.
And it says demand for Levi’s 501 jeans “remained relatively stable in the first quarter of 2009 compared to last year.”
This seems to confirm the belief of John Anderson, Levi's chief executive, who says: “When times get tough [people] go to the brands they know and trust.”
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