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Levi’s will cut up to 650 jobs

SHARE Levi’s will cut up to 650 jobs

SAN FRANCISCO — Facing pressure to lower the prices of its clothes, jeans maker Levi Strauss & Co. said Wednesday it will cut up to 650 jobs in the United States and Europe to slash its expenses.

The cuts represent 5 percent of Levi's worldwide work force of 12,500 employees and continue an overhaul that has eliminated thousands of Levi's jobs. Just last year, Levi's closed six U.S. manufacturing plants in a move that laid off 3,600 workers.

The San Francisco-based company said about 350 of its salaried U.S. workers will lose their jobs in the latest purge. Levi Strauss also is pursuing a plan to cut 300 European jobs if it can obtain the required approvals from government regulators who oversee layoffs there.

Most of the U.S. cuts probably will be concentrated in San Francisco, company officials said Wednesday. Other jobs will be eliminated in sales offices scattered across the country.

The jeans maker has been struggling to reverse a six-year slide in its sales as consumers began buying more trendy or less-expensive clothes.

In an effort to bounce back, Levi's has designed more clothes to appeal to teenagers and young adults, and cut costs to lower prices. The company also entered the discount jeans market earlier this summer with a new brand called Signature that is sold in Wal-Mart stores.

The changes helped boost Levi Strauss' sales to $1.1 billion in its most recent quarter ended Aug. 24, a 6 percent to 7 percent increase from last year, according to preliminary results released Wednesday. The privately held company said its third-quarter profit will range from $24 million to $28 million, a 75 percent to 104 percent rise from last year.

But the company still needs to lower its expenses more to remain competitive during the U.S. clothing industry's "worst deflation since the Depression," said Phil Marineau, Levi's chief executive.

"The pressure on price and (profit) margins will continue unabated," Marineau said in an interview Wednesday. The company hopes to avoid further job cuts though, Marineau emphasized.

The challenges facing Levi's prompted Standard & Poor's to lower the company's already tarnished credit rating by two notches, from the "speculative" category of BB- to the "highly speculative" category of B.