NEW YORK — Speculation about what’s ahead for Levi Strauss & Co., for years one of the jeans industry’s favorite pastimes, is reaching a fever pitch.

A month has passed since the San Francisco company hired turnaround expert Alvarez & Marsal to help develop a plan of how to end a prolonged sales slump and improve profitability. Levi’s officials have emphasized that the hiring of that firm does not in this case presage a bankruptcy filing — and financial sources agreed that such a move currently appears unnecessary.

Still, with the company expecting to mark 2003 as its seventh consecutive year of sales declines, it’s clear that something has to be done. On that much, observers agree. But what to do with the company is an open question.

“They’re not going to be able to maintain the status quo that they’ve been on, quarter after quarter, and year after year,” said a former Levi’s executive. “I’m sure that the banks are not very happy with the situation. The bond prices are down. I would think they’re going to come to a fork in the road where they’re going to have to decide whether to sell or reorganize. I don’t think there’s a third choice.”

According to a financial source, Levi’s bonds, which finance its debt, on Wednesday were trading at about 65 cents on the dollar, down somewhat from where they had been in recent weeks. The company has indicated that it will not be releasing results for the fiscal year ended Nov. 30 until sometime in February. In recent years, Levi’s has released results in January. The delay comes at the end of a year when the company has warned about earnings restatements and faced a lawsuit from former employees alleging improper financial practices, and has made investors nervous, the source said.

After peaking at $7.1 billion in 1996, Levi’s sales have slipped every year, and the company has warned that it expects 2003 revenue to come in at 6 to 7 percent below the prior-year level, factoring out the effect of exchange-rate fluctuations. Fiscal 2002 sales were $4.14 billion.

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