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16 Jul. 2009

LEVI STRAUSS NET REVENUES DOWN 3%

Levi Strauss & Co. has announced its second quarter 2009 financial results. As part of these results, Levi Strauss Europe, Middle East and North Africa (LSEMA) posted Q2 2009 net revenues of $221 million. Although the negative impact of currency exchange rates led to reported results down 17%, revenues remained stable in constant currency compared to the same period the previous year. While sales in the wholesale channel were down, particularly in the region’s mature markets, these were partially offset by sales in new company-operated stores.

Operating income for the region was down 49% to $22 million, largely due to the unfavorable impact of currency, as well as a decline in operating margin as a result of the continued investment in the region’s retail network.

“We continued to face a very challenging economy during the second quarter,” said Armin Broger, President Levi Strauss Europe, Middle East and North Africa. “In Europe, traditional wholesale channels continued to decline, although we partially balanced this through better performance of our collections and improved sales from our new company-operated stores, particularly in our developing markets. This clearly highlights the strategic importance of continuing to build the brand and invest in the business to ensure we’re in a strong position when the economy improves.”

Globally, Levi Strauss & Co.’s net revenue for the first quarter of 2009 fell 3% to $905 million compared with the previous year. Total operating income for the quarter increased 8% to $56 million, primarily reflecting lower SG&A expenses in the company’s Americas region.

On the company’s investor call yesterday, CEO John Anderson said: “There’s no question it remains tough out there. But we’re addressing these challenging conditions with our strong operational performance. We continued to take costs out of the business. Our investment in working capital was down and we delivered strong cash flows, enabling us to continue to invest in our brands.”

—Melanie Gropler

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