LEVI STRAUSS UPGRADED: Moody's Investors Service has upgraded its rating on Levi Strauss & Co.'s $1.85 billion unsecured notes. The ratings service said the upgrade was warranted given Levi's ability to stabilize sales and improve profitability. For the six months ended May 29, the San Francisco-based company reported earnings of $74.1 million on sales of $1.95 billion. Moody's also pointed to the introduction of the Levi Strauss Signature brand into international mass channel markets as a benefit to diversifying its distribution network. The ratings still remain in the speculative range, getting raised to "Caa2" from "Caa3." However, the rating on the company's outlook was raised to "positive" from "stable" based on the belief the company will be able to generate enough cash flow after fiscal 2005 to pay down debt. The company reported debt of $2.11 billion during the most recent quarter.

: Gottschalks Inc. said Tuesday that second-quarter net income rose 15.6 percent to $259,000 from $224,000 a year ago. On a per-share basis, profits were flat at 2 cents a share; analysts had been expecting 5 cents. Total revenues in the quarter were up 2.5 percent at $153 million, while same-store sales rose 3.1 percent. "We have made steady progress in our initiative to appeal to a broader customer base through our focus on several important fashion categories, such as better sportswear, accessories, shoes and junior apparel," said Jim Famalette, president and chief executive officer of the Fresno, Calif.-based retailer. In the six months, Gottschalks narrowed its loss to $1.7 million, or 13 cents, from a loss of $2 million, or 16 cents, a year ago. Revenues in the period totaled $298.6 million, an increase of 1.1 percent, and same-store sales were up 1.3 percent. In the full year, the company still expects to earn 59 cents to 65 cents a share, which compares with analysts' estimate for 60 cents. Shares of the company closed down 3 percent in Tuesday trading at $10.20.

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