Levi's not immune to challenging climate

The world's most famous jeansmaker Levi Strauss & Co last week reported a drop of 18 percent in quarterly net income, which it attributed to higher taxes.In a conference call with analysts, chief executive Phil Marineau said that gas prices had also contributed to the pressure on lower priced lines. "It is a tremendous competitive environment.customers are cautious," he said.

Levi's, which is privately held, said that the fall in net income to $38.2 million (£22.6 million) in the third quarter ended 28 August was due to higher income taxes, which rose from $17.8 million during the same period last year to $39.8 million this quarter. Quarterly operating income climbed 9 percent to $139 million compared with last year.

Revenue from global sales increased 2.4 percent in the third quarter to $1.02 billion, while revenue in the Asia Pacific region climbed 17 percent and rose 4 percent in the US. In Europe, revenue dropped 10 percent.

According to Marineau, Europe was experiencing "the worst retail environment in the past 15 years." He told Reuters that strategies to turn the European business around were taking longer than expected. Restructuring charges for the quarter fell from $28 million to $5 million.

In the past year, the San Francisco based company has been trying to reverse fortunes - it has seen sales slide during the past eight years - by closing factories and laying off employees as it cut unprofitable clothing lines to focus on the core Levi and Dockers brands and the lower-priced Signature label.

Signature sales increased 18 percent in the US, where it is sold in Wal-Mart, Target and K-Mart stores. Marineau said that the targeted gross profit margin for Levi Strauss is in the "mid 40s" percentage range for the year. In a bid to strengthen its product line, the company will introduce two new Levi's jeans called Red and Capital E. The jeans, which will cost over $70, will be in US department stores in November.