Levi Strauss & Co. reported a small boost in sales but profits fell 11% in the third quarter. The jeans giant says that higher global sales were offset by lower wholesale sales in the Americas. The profit dip was blamed on a charges related to a global productivity initiative. Adjusted EBIT was down 2% to $119 million.
“Despite continued external challenges, including soft retail traffic and a highly-promotional environment, we grew revenue in the third quarter by focusing on the controllable aspects of the business,” commented CEO Chip Bergh in a statement.
“The decline in net income essentially reflects the investments we’re making to improve productivity. As we enter the fourth quarter, we remain confident in our ability to grow sales and adjusted EBIT this year, as we continue to focus on driving retail conversion, engaging with consumers globally with our Live in Levi’s campaign, and improving the structural economics of our business.”
The global productivity initiative, announced in March, is essentially a restructuring with job cuts—about 20% of the company’s non-retail and non-manufacturing staff worldwide, or 800 people. The initiative also calls for streamlining product development, cutting costs on service-delivery and maintaining disciplined procurement practices.
Levi Strauss said in March that it expected to save between $75 and $100 million before restructuring charges of about $65 million. However, the company said the charges for first nine months of the year have amounted to $103 million with annual savings estimated at $100 million to $125 million. Further charges are expected for the fourth quarter.
In other news, Levi Strauss named Jenny Ming, the chief executive of Charlotte Russe Inc., to its board of directors.