Weak retail markets in the United States and Japan had a negative impact on third quarter sales at Levi Strauss & Co, although the company maintained solid margins and continues to make progress in its business turnaround.

For the third quarter ended August 26, 2001, net sales declined 12.8 per cent to $984mfrom $1,128m in the third quarter of fiscal 2000.

"Weak economies and retail markets in the US and Japan are slowing the pace of the company's business turnaround," said Philip Marineau, Levi Strauss & Co chief executive officer. "Despite this, we are confident that our turnaround strategies are the right ones. During the past 24 months, we've made significant improvements in our overall financial picture, supply chain performance, retail relationships, and products and marketing programmes. But it will take more time to fully stabilise the company in this very uncertain economic environment.

Company Profile:

Levi Strauss & Co

"Our financial condition remains strong," said Marineau. "We're tightly managing costs; we have strong margins, and we reduced debt in the current quarter. Moreover, when we bring relevant product to the consumer, surround it with the right advertising and retail programmes, and ensure that it's easy to find and buy, we see sustainable improvements. This is the case in Europe, where our business is stabilising.

"In the US we have initiated additional marketing programmes for the fourth quarter to support our retail customers and improve our sales trends. Our Levi's Superlow jeans for juniors in the US is a great illustration of the power of the Levi's brand when we execute our strategic formula effectively. In retail stores where our Superlow jeans had the appropriate placement and point-of-sale support, we saw excellent rates of sale. The same is true with our new Dockers® Mobile pant for men."

Third-quarter gross profit was $399m, or 40.6 per cent of sales, versus $464m, or 41.2 per cent of sales, in the comparable period of 2000. While gross margins declined slightly from prior year, primarily due to production downtime costs incurred in the third quarter of 2001, the third-quarter margin of 40.6 per cent is strong, reflecting lower sourcing and fabric costs and reduced inventory markdowns.

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