Levi Strauss suffers first quarterly loss since '99

Levi Strauss & Co has produced a second-quarter loss of $81m (€83m), marking the first time the company has lost money in three years.

It blames the cost of closing eight manufacturing plants and offering discounts to merchants.

The loss stems largely from a $150m (€155m) charge taken to cover severance pay and other expenses incurred in closure of plants in the US and Scotland.

The second-quarter loss contrasted with a $43.4m (€44.9m) profit at the same time last year.

If not for the special charges, Levi's said it would have earned $15m (€16m) in its latest quarter.

San Francisco-based Levi's cut into its revenue during the three months ending May 26 by lowering the wholesale prices that retailers pay for the company's clothes, a decision meant to curry favor by helping merchants improve their profit margins in a sluggish economy.

Phil Marineau, Levi's CEO says the discounting was the main reason Levi's second-quarter revenue plunged 12% from the prior year to $923.5m (€956.1m).

The second quarter marked Levi's first loss since its September 1999 hiring of Marineau, a former Pepsico executive brought in to reverse the company's sliding sales.

Even though its sales have continued to decline, Levi's hasn't lost money since the quarter ending in February 1999. Although it is privately held, Levi's discloses its quarterly financial results because some of its debt is publicly traded.

Despite the "ugly" results in the latest quarter, Mr Marineau remains confident that this year will be the last in six consecutive years of sales decline for Levi's.