Chip Bergh wants to get Levi Strauss & Co.’s Dockers business back into 10-digit territory.

This story first appeared in the February 8, 2012 issue of WWD. Subscribe Today.

Bergh, who left Procter & Gamble to become president and chief executive officer of Levi’s in September, said Dockers, once a $1.2 billion business that’s now “a little bit more than 10 percent” of Levi’s $4.76 billion in annual revenues, or about $476 million, has “more than enough opportunity” to return to its peak sales level. He indicated that the seeds for such a revival already had been planted in Europe, where it is presented and perceived as a “true lifestyle brand.”

He made the comments following the company’s release of fourth-quarter earnings, which fell 48.8 percent on a 4.2 percent increase in revenues. While overall results were pulled down by the San Francisco-based jeans giants’ inability to cover increases in cotton costs with corresponding boosts in prices, as well as by a shift toward the discount channel in order to help control inventories, Bergh said Dockers had “struggled” and that stopping its “rapid erosion” was among his top priorities.

“You need more than a one-brand portfolio,” he said.

Price increases for the line, focused on casual slacks, were met by resistance from consumers and retailers and were rolled back starting in November. Some core stockkeeping units within the assortment had been discontinued and had to be reinstated. In addition to Levi’s and Dockers, the company markets the Denizen brand, which was launched in the Far East and is carried by Target Corp. in the U.S.

Asked by an analyst if the company was concerned about the credit difficulties faced by Sears Holdings Corp., a major Levi’s account that has seen its vendor approvals interrupted by CIT Group, Blake Jorgensen, Levi’s chief financial officer, indicated Levi’s carried its own paper on the Sears account and wasn’t alarmed by developments. In fact, the company’s provision for doubtful accounts at the end of fiscal 2011 was $4.6 million, down from $7.5 million a year earlier.

In the three months ended Nov. 27, net income attributable to Levi’s fell to $44 million from $86 million in the prior-year quarter, with gross profit down 3.6 percent to $624 million and gross margin down to 46.4 percent of revenues from 50.2 percent in the 2010 period. A $34 million tax benefit boosted earnings in the final quarter of 2010.

Revenues rose to $1.34 billion, from $1.29 billion, and were up on both a reported and constant-currency basis in all three of the company’s regions. In the Americas, sales rose 4.5 percent to $807 million, or 5 percent at constant currency, while they were up 2 percent on both a reported and constant-currency basis in Europe, to $306 million. Asia Pacific registered the largest increase, picking up 6 percent, and 7 percent at constant currency, to $231 million, despite a decline in revenues in Japan.

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