SAN FRANCISCO (AP) — Levi Strauss & Co.'s second-quarter profit fell 38 percent as the sluggish economy, higher cotton prices and unfavorable currency exchange rates took a toll on earnings.
The privately held clothing company reported Tuesday that it earned $13 million on revenue of $1.05 billion for the quarter that ended May 27. That is down from $21 million in the same quarter of last year on revenue of $1.09 billion.
The results include an $8 million debt extinguishment charge tied to refinancing its debt for lower interest rates.
Levi Strauss, based in San Francisco, said its revenue fell on weaker sales in Asia and Europe. It was the first time in two years that its business in Asia declined.
Gross margin fell because of higher cotton costs, which were only partially offset by lower expenses in other parts of its business. The company has raised prices on some products to offset rising cotton prices.
"It is clear that the economic headwinds are getting stronger," said Chip Bergh, president and CEO. "In the face of these tougher economic conditions, we are rationalizing our business, reducing operating costs and focusing our resources on the opportunities that will have the most impact in growing shareholder value."
Levi Strauss sells its products in more than 2,300 franchised and company owned stores worldwide as well as department stores and other retailers.