NEW YORK — Levi Strauss & Co. started shipping small quantities of the company’s new Levi Strauss Signature line to select Target Stores locations this week.

A Levi’s spokesman confirmed Wednesday that the shipments of men’s products were part of a test run of the line, intended to precede a full-chain rollout of men’s, women’s and children’s products in mid-January. The spokesman acknowledged the San Francisco-based company also hoped to “capture a little bit of the holiday business.”

He declined to comment on Levi’s planned sales or to say how many stores Levi’s is currently shipping. Target Corp. operates more than 1,100 Target stores in the U.S.

A Target spokeswoman did not return phone calls.

Levi Strauss Signature rolled out at Wal-Mart Stores Inc.’s more than 2,800 U.S. locations in July. That launch followed a similar pattern, with small shipments trickling out in the months preceding the full launch, to ensure that the company’s distribution systems were in place.

Currently, Levi’s is shipping just enough products to Target locations to fill one four-way fixture, the Levi’s spokesman said.

From the day in October 2002 when they revealed their plans to launch a mass-market brand, Levi’s executives have said their intent was to expand distribution beyond just Wal-Mart. Levi’s president and chief executive officer, Phil Marineau, said he believed the company could sell “hundreds of millions of dollars” of Signature merchandise in various mass-market stores.

Other sources have said the Signature business could easily exceed the billion-dollar mark.

In recent months, Levi’s executives have said they were in negotiations with other mass merchants. Shopko has also been cited by sources as a customer Levi’s is pursuing. Levi’s has already lined up other customers for the product outside the U.S.

However, the question of whether Levi’s would succeed in lining up other customers for the line in the U.S. was seen as a key issue and important to the company’s retaining solid control of its brand, while doing business with the Bentonville, Ark., behemoth.

Observers said having the brand in two major U.S. chains would be beneficial to Levi’s.“If, in fact, they can multidistribute Signature to both Target and Wal-Mart, I think it’s a relatively good idea because they’re not dependent on the one retailer at some point in time bouncing them out,” said Andrew Jassin, a principal in the Jassin-O’Rourke Group. “Assuming the prices of the same products are maintained, that can make it a win for everybody.”

A spokeswoman for Wal-Mart declined to comment on the Signature line’s introduction in Target, but said, “Our customers are continuing to respond favorably to the Levi Strauss Signature offering.”

The extension of the Levi’s offshoot into the mass channel has been controversial and Levi’s executives have acknowledged that customers of the main Levi’s line appear to have cut back orders this year out of fear that the Signature launch would cannibalize their sales. Levi’s officials have insisted that no such cannibalization has occurred.

The Signature launch appears not to have been enough to stop Levi’s sales slide, though, which seems likely to hit its seventh consecutive year. While Levi’s has not yet released financial results for its fiscal year, which ended Nov. 30, the company last month said it expects sales for the year to be off by between 6 and 7 percent, factoring out the effect of fluctuations in exchange rates. That means that sales of Signature products — even at the high level required to fully stock Wal-Mart — have not been enough to offset revenue declines at the company’s other brands.

As reported, earlier this week Levi’s said it was hiring turnaround experts Alvarez & Marsal to help the company change its financial fortunes. Among the company’s assignments are coming up with ways of cutting costs and generating additional revenues.

To access this article, click here to subscribe or to log in.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus