Jeans giant Levi Strauss & Co on Thursday posted a 12 per cent year-on-year slide in second quarter sales to $924 million and a steep fall in net profit as it was hit by huge restructuring costs and "difficult market conditions worldwide".

The San Francisco-based company, which recently announced the closure of six US plants and two Scottish factories, said its net loss for the period was $81m, which included restructuring charges and related expenses of $171m, of which $150 was for those plant closures.

Excluding restructuring charges and related expenses, second-quarter net income in 2002 declined 65 per cent to $15m versus $43m in the second quarter of 2001.

In a statement, Levi Strauss said: "Although sales were affected by difficult market conditions worldwide, the company turned in a good performance against several key financial measures and expects to meet its previously stated financial targets for the full year, including stabilising sales."

"We said the quarter would be tough and it was, but we are still on track to stabilise our sales by year-end," added CEO Phil Marineau. "We were hit by stiff price competition in Europe, but our US and Asia Pacific businesses met our expectations. Despite the difficult retail environment throughout most of our markets, we sustained solid profit margins, generated strong cash flow and brought down debt."

He continued: "This is the inflection point for our company turnaround. From now through the end of the year, we expect to see significant improvement in sales trends. We have excellent bookings with our retail customers, and are launching new products and marketing programs around the world to drive sales.

"This includes the introduction of lower-priced Levi's jeans and Dockers khakis in Europe and a revamped Levi's jeans line in the US. When you look at our products, retail relationships and operations, we are more competitive today than we have been in years."

Second-quarter gross profit, which includes restructuring related expenses of $30m primarily for workers' compensation and pension enhancements, was $370m, or 40 per cent of sales. Excluding restructuring related expenses, gross profit was $400m, or 43.3 per cent of sales, which compares to $453m, or 43.3 per cent of sales, in 2001.

Operating loss for the quarter, including restructuring charges and related expenses of $171m, was $82m. Excluding restructuring charges and related expenses, operating income in the second quarter of 2002 fell 28 per cent to $89m compared to $124m in the prior year period.

It aded that as of May 26, 2002, its total debt was $1.86 billion, compared to $1.96bn in the fiscal year ended November 25, 2001.