The retailer reported earning $40.7 million in the quarter that ended Feb. 27, down 28% from a year earlier, after slashing prices on its jeans and Dockers khaki pants.
Levi Strauss & Co. reported a lower quarterly profit after cutting prices on its Dockers khaki pants and Levi's jeans to spur sales.Shoppers' resistance to paying full price comes at a time when Levi Strauss and rivals such as Guess Inc. are trying to pass on high cotton costs to customers.
"You're not going to see dramatically lower cotton prices in the next six to 12 months," Chief Financial Officer Blake Jorgensen said. Jorgensen said rising gasoline prices are also feeding consumer resistance, particularly for shoppers with modest incomes.The private company said that first-quarter net income was $40.7 million, down 28% from $56.4 million a year earlier.Gross margin was down 1.7 percentage points to 49.8% of revenue during the holiday quarter on more discounting that Jorgensen attributed to the need "to be fairly aggressive" in generating sales and clearing inventory to make room for spring merchandise.
Levi said it also faces more cautious ordering from department store chains such as Macy's Inc., J.C. Penney Co. and Kohl's Corp., echoing concerns expressed by Guess when it reported results in March.
Jorgensen recognized that the discounts on Dockers show that Levi Strauss still has a way to go in its effort to reinvent that line of pants.
"The battle with Dockers is we're trying to reignite a category that went stale," Jorgensen said. Revenue, including sales and licensing revenues, rose 8.3% to $1.12 billion during the quarter that ended Feb. 27, helped by a surge in sales in Asia and improving wholesale business in the United States.
In the Americas region, where Levi Strauss gets half its business, revenue rose 9%
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