Blame it on bad times. Levi Strauss & Co. officials confirmed this week that they had begun selling some excess inventory — including Levi’s Red Tab products — to Sam’s Club, but said the move had nothing to do with the...
Blame it on bad times. Levi Strauss & Co. officials confirmed this week that they had begun selling some excess inventory — including Levi’s Red Tab products — to Sam’s Club, but said the move had nothing to do with the upcoming launch of the Levi Strauss Signature mass market brand at Wal-Mart Stores Inc.’s 2,000-plus U.S. stores.
At an investors’ conference in New York Monday sponsored by Credit Suisse First Boston, Wal-Mart executive vice president of general merchandise Don Harris said the Bentonville, Ark.-based retailer was “leveraging” its new relationship with Levi’s to secure the company’s Red Tab products for some outlets at its Sam’s Club division.
“Sam’s is actually buying Levi’s regular Red Tab jeans in the clubs for the first time direct and they’re doing very well,” he said. “So we were able to not just leverage this Levi’s Signature line, but we also got the regular Red Tabs in the Sam’s Club by working together with Sam’s as we approached Levi’s.”
In launching the Signature line, executives at San Francisco-based Levi’s were careful to leave the trademarked Red Tab two-horse patch and pocket arcuate off the mass market line in an effort to prevent that business from competing directly with its core franchise.
A Levi’s spokesman said that the company started selling to Sam’s early this year, but had been selling to other wholesale clubs and outlets for years.
“We do and have for a while sold closeouts and excess inventory into the warehouse or club channel,” he said. “We have been selling product to Costco for seven years now. That’s what this is. It’s part of managing our own inventories and we have sold product to Sam’s Club as part of that.”
Levi’s started selling to Sam’s, he explained, because it had more inventory than anticipated coming off of the holiday season.
“Many of our retail customers had larger-than-expected inventories in January after the holidays,” he said, which caused them to order less merchandise than Levi’s had anticipated.
He emphasized that Levi’s does not produce products specifically for Sam’s, adding that, as a result, the chain “won’t have the consistency and size scale you would have on an ongoing business, where you’d be fully in stock.”He said he did not know precisely how much merchandise the company sells to Sam’s.
For many years, Levi’s off-loaded much of its closeout merchandise through a chain of more than 100 Levi’s by Design outlets operated by Designs Inc., now called Casual Male Corp. However, over the past year, that company has been closing Levi’s outlets with plans to eventually close half its Levi’s and Dockers units. At the end of the company’s first quarter on May 3, Casual Male had 82 Levi’s outlets in operation.
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