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Levi’s FTC Filing Asks Joint Venture OK

NEW YORK -- A Levi Strauss & Co. spokeswoman said Wednesday the company's filing with the Federal Trade Commission, to confirm that a 1978 consent order does not prevent Levi's from opening stores, was done to clear the way for a previously...

NEW YORK — A Levi Strauss & Co. spokeswoman said Wednesday the company’s filing with the Federal Trade Commission, to confirm that a 1978 consent order does not prevent Levi’s from opening stores, was done to clear the way for a previously announced joint venture.

The company has no plans to open stores on its own in the near future, she said.

“We filed with the FTC to leave no stone unturned in terms of going forward in our joint venture with Designs Inc.,” she said, referring to the Chestnut Hill, Mass.-based retail partner that operates eight Original Levi’s stores.

Under the joint venture agreement, still to be finalized, Levi Strauss and Designs will open 35 to 50 stores in 11 Northeastern states and the District of Columbia in the next three to five years. Designs, with 70 percent ownership, will take care of the day-to-day operations; Levi Strauss, with 30 percent, will oversee marketing, merchandising and image-related operations.

“Would we ever consider opening our own stores? Yes,” said the spokeswoman. “Are we planning anything now? Absolutely not. We would consider it, but at this time we have reached no final decision. The FTC filing was written in an open-ended way so that if, in the future, we want to form another joint venture or open our own stores, we don’t have to go back to the FTC.”

She noted a published report from the Bloomberg Business News implied Levi’s could become a competitor for denim specialty stores such as The Gap, or some of its own accounts, such as Sears or J.C. Penney. That, she said, is not the point of the Levi’s stores.

“This is not a volume strategy, it is an image strategy, although we enjoy incremental sales,” she said. “The stores help us maintain consistent brand image and also let us know how to better service all of our retail accounts,” she added. According to the FTC, Levi’s petitioned the agency Aug. 25 to “clarify” a 1978 FTC consent order signed by the company. The order addressed price-fixing allegations against the company and prevented it from suggesting retail prices. Essentially, the company asked the FTC to reaffirm that the consent order did not prevent Levi’s from opening retail stores.

“The reason for the request is that [Levi Strauss]…plans to establish retail stores that sell only Levi’s products,” the company’s filing reads. “LS & Co. currently plans that [Levi’s Only Stores] will form one joint venture with an LS & Co. customer, Designs Inc., that will operate…[stores] in one part of the country. [Levi’s Only Stores] currently plans to own and operate [stores]) in other areas.”

Levi’s explained in the filing that the retail market for jeans has changed in the almost 20 years since the consent order was issued. The company cited competition in the jeans and apparel industry and the fact that retailers’ space to display the complete Levi’s line was limited.