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Powerhouses VF, Levi Strauss Face Hurdles to Jeans Growth

The ups and downs of the jeans business may feel like a roller-coaster ride to smaller firms, but the category’s powerhouses face their own gravitational forces.<BR><BR>Levi Strauss & Co., seven years into a sales slump, has placed its focus...

The ups and downs of the jeans business may feel like a roller-coaster ride to smaller firms, but the category’s powerhouses face their own gravitational forces.

Levi Strauss & Co., seven years into a sales slump, has placed its focus firmly on improving profitability. After shopping the Dockers brand for six months, the San Francisco-based company in October said it planned to keep the brand because buyers were unwilling to pay what Levi’s believed it was worth.

As part of the effort to improve performance, the company on Monday said it plans to lay off 50 people at Dockers’ European operations. That will drop Levi Strauss’ worldwide head count below 9,500, compared with 12,300 at the start of the year. Much of the cutting has been the result of restructuring headed by consultants Alvarez & Marsal, who have been advising the company for the past year, people familiar with the situation said.

On the women’s side, Levi’s officials said the brand has been performing well. When the company reported third-quarter results, Robert Hanson, president of the Levi’s brand in North America, said sales of misses’ products were up 21 percent in the quarter, with junior jeans sales rising 6 percent, driven by strong demand for boot-cut, flared and tinted jeans. That partly offset softness in the core men’s business and helped leave overall sales for the nine months ended August up 0.8 percent to $2.92 billion.

Meanwhile, VF Corp. has seen its jeans business slip in recent months. With a lineup including the Wrangler and Lee brands, VF is the world’s largest apparel company and sells almost $2.7 billion worth of jeanswear a year. Through the three months ended Oct. 2, jeans sales slipped 0.8 percent, though the company said it expected to reverse that trend through some product introductions.

The Lee brand has been pushing its “One True Fit” styling, which Terry Lay, the chairman of the firm’s jeanswear coalition, said is “targeted at a missy consumer who still has a junior attitude.”

VF also has been expanding its presence in the high-end jeans market through the launch of the premium-priced Wrangler 47 line, designed by Wendy Mullins, and the acquisition of Earl Jean.

This story first appeared in the December 9, 2004 issue of WWD.  Subscribe Today.

Acquisitions are also the core of VF’s overall growth strategy. The company is on track to hit the $6 billion sales mark this year, a 15 percent rise from 2003. The growth has been boosted by the addition of the Vans, Napapijri and Kipling brands over the past year.