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“Selling at the club channels…is against the strategic price positioning,” Marineau said.
Much of the cost-cutting in 2004 came in the form of job cuts and other restructuring steps urged by Alvarez & Marsal, the consulting firm Levi’s hired in December 2003. Since the start of its 2004 fiscal year, the firm has cut worldwide head count by 28 percent to 8,850.
The company closed its remaining company-owned factories during the year and shifted production to foreign contractors. That shift led to inventory shortfalls through the second half of the year, with the company reporting that it wasn’t always able to fill customers’ orders in full and on time.
Marineau said Levi’s continues to work on improving its sourcing efforts and “as we go to the back-to-school season, we will be getting our targeted service levels, as well as being fully in stock.”
Marineau said following the departure next month of A&M consultant Jim Fogarty — who is serving as interim chief financial officer — the consulting firm’s work with Levi’s will be essentially complete. Hans Ploos van Amstel, of the firm’s European division, will be shifting into the cfo post.
Fogarty noted the firm’s women’s business grew during the course of the year to represent about 25 percent of total sales, up from about 20 percent in 2003.
The firm continued to experience sales declines in its core Levi’s and Dockers brands in the U.S. and Europe, though its sales in Asia were up for the year and the mass-market Levi Strauss Signature brand saw sales rise 55 percent to $336 million.
In North America, total sales for the year came to $2.43 billion, a 6.3 percent decline from 2003. Sales of the Levi’s brand in the U.S. were off 9.2 percent to $1.25 billion and U.S. Dockers sales dropped 20.9 percent to $649.4 million.
Sales in Europe rose 5 percent in the year to $1.04 billion. The growth was the result of the appreciation of the euro versus the dollar over the past year. Factoring out exchange rate fluctuations, European sales would have been off 5.7 percent, the company said.