NEW YORK — That’s two in a row for Levi Strauss & Co.

The San Francisco-based jeans maker managed a 2 percent rise in its fourth-quarter sales to $1.26 billion — the second consecutive quarter of sales growth after five-and-a-half years with a slumping top line. The firm posted revenues of $1.23 billion a year ago. Sales in constant currencies rose a milder 0.6 percent over the quarter.

"That has to feel good for our company," chief financial officer Bill Chiasson said in a phone interview. "We have stabilized the business."

Reported sales in the Americas dipped 1.4 percent to $810.1 million, while Europe picked up 8.5 percent to $336.2 million and Asia’s turnover rose 10.3 percent to $113.7 million.

Despite the revenue uptick for the fourth quarter ended Nov. 24, Levi’s net income sank 29.4 percent to $44.5 million from $63 million a year ago. The period was pulled down by $15.7 million in restructuring expenses and $82,000 worth of related charges.

Earnings before interest, taxes, depreciation, amortization and restructuring charges rose 10.7 percent to $173.8 million.

It’s been a long haul for the firm. After a stretch in rocky seas, chief executive officer Phil Marineau initiated a turnaround in 1999. That effort led to what Levi’s has described as an inflection point in its sales midway through 2002 and the stabilization of its business in the second half, a process expected to continue into the first half of this year.

"Market-leading product innovation, strong retail and marketing programs, and improved execution are driving better performance," Marineau said in a statement. "We are ready to grow again in 2003."

That growth will come with help from the launch of its Signature line in about 3,000 U.S. Wal-Mart stores in time for the back-to-school season. For 2003 on whole, Levi’s is looking to grow its top line by 2 to 5 percent in constant currencies.

"Throughout the year, we expect to continue expanding our reach to a broad range of consumers, including the fast-growing women’s market, by offering relevant products at a wide range of price points," Marineau said.The company has stressed that it is also focusing on its core business, striving to keep its retail base comfortable with its move into the mass channel.

On a conference call with its bondholders and Wall Street analysts, the firm did acknowledge that it has been in discussions with one of its department store customers that wants to plan its line "more tightly." Marineau said, "At this point, we have not had any of our major customers take any measures of retaliation or pull back from our business. They are staying with us, but keeping an eye out for exactly what happens."

Chiasson said Levi’s relationship with Wal-Mart "has been the elephant in the room every time we would talk to a customer for some time." The firm, though, is working to overcome this with a continuing focus on providing retailers with the right product first and then having the infrastructure to get it to them when they need it. Levi’s is also partnering with its retailers to help them improve their margins.

None of the relationship-building efforts the firm’s made with its retailers are going away, said Chiasson. Levi’s offerings to Wal-Mart, he noted, will also be sufficiently different from the version seen in department stores, with a different label and distinct details.

"The Signature brand is a unique brand," he said. "It is a completely different brand and product that is targeted toward the more value-conscious consumer."

Marineau added that Levi’s has been updating its offerings. He said, "We have revitalized our product lines, from the technological enhancements of Dockers Go Khaki with Stain Defender to the popular vintage finishes and low-rise styles of the Levi’s brand."

The company is also rolling out globally its Type One jeans into "popular price points," which go as low as $34.95 in the U.S. The name was first launched into "super premium" outlets in April, and then into "premium" stores in the back half. The rollout will be accompanied by a Super Bowl commercial and connected promotion. Under Levi’s consumer segmentation strategy, the product is differentiated between its distribution channels.

For the full year, Levi’s sales slid 2.9 percent to $4.14 billion or down 3.2 percent on a constant currency basis. This translated into an 83.5 percent drop in profits to $25 million from $151 million a year ago. EBITDA before restructuring sank 8.7 percent for the year to $507.1 million."We delivered on all of our financial goals in 2002," Chiasson added in a statement. In addition to the sales turnaround, he said the firm "held costs in check and maintained industry leading gross margins. We also cut debt by more than $100 million this year, while at the same time deploying over $100 million in cash toward plant closures and other restructuring initiatives."

About 90 percent of the firm’s manufacturing is now done under contract.

As of the end of the year, Levi’s total debt was reduced by 5.6 percent to $1.85 billion. While it’s expected to rise by $200 million to $300 million during the year, in part from the entry into Wal-Mart, the firm expects to end 2003 with total debt on par with the end of 2002.

Last week, Moody’s Investors Service boosted its rating on Levi Strauss & Co.’s senior unsecured debt to "B3" from "Caa1." The firm’s senior implied debt rating was also confirmed at "B2," or five notches into speculative or "junk" grade, as was the "B1" rating on its existing bank facility. The outlook on Levi’s debt rating is stable. Moody’s said the action reflects improvement in the company’s liquidity after the recent issuance of $425 million in new senior unsecured notes maturing in 2012.

On Monday, the firm added an additional $50 million worth of notes to the offering, which Chiasson attributed to investor demand. Levi’s is also planning to close on an $800 million senior security credit facility by the end of the month.

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