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Levi’s has 1st-Quarter Loss

SAN FRANCISCO -- Stung by weak U.S. sales and a $236.5 million accounting charge, Levi Strauss Associates, parent of Levi Strauss & Co., reported its first quarterly loss since 1986.<BR><BR>The decline was attributed to lower unit sales of men's...

SAN FRANCISCO — Stung by weak U.S. sales and a $236.5 million accounting charge, Levi Strauss Associates, parent of Levi Strauss & Co., reported its first quarterly loss since 1986.

The decline was attributed to lower unit sales of men’s jeans and men’s and women’s Dockers apparel.

For the first quarter ended Feb. 27, the apparel giant reported that operating income declined 16 percent, to $196.9 million from $233.5 million a year ago. However, after the accounting charge for post-retirement benefits slightly offset by a gain from adopting a new method for income tax accounting, there was a bottom-line loss of $125.8 million. In the year-ago quarter, the firm earned $132.7 million.

Sales slipped 4 percent, to $1.3 billion from $1.4 billion. U.S. sales totaled $756 million in the quarter, down 11 percent. Sales outside the U.S. increased 7 percent to $582.6 million and accounted for 44 percent of total sales against 39 percent in the year-ago quarter. The change in sales mix reflected continuing strong demand in Europe and the lower U.S. sales.

The firm said that strong demand for basic denim products in Europe helped to overcome weakness in other non-U.S. markets, particularly Canada and Japan.

Sales outside the U.S. were up more than 5 percent, driven by the strong European sales.