Levi's Struggles with 98% Profit Drop

Levi's president and chief executive John Anderson said: "We expected the second quarter to be tough, and it was. The retail environment in the United States remained challenging. In addition, our transition to a new enterprise resource planning system in the US negatively affected our results. Increasingly difficult economic conditions in many markets worldwide are impacting consumer spending, but our brands remain strong. We are pleased with the continued strong growth of our emerging markets and our retail network around the world."

The implementation of the company's enterprise resource planning system (ERP) led to delayed orders and cancellations by retailers and amounted to a "substantial portion" of Levi Strauss' revenue decline in the quarter.

Retail expansion also crimped profit, the company said. Levi Strauss owns and operates some 48 US stores and is searching for new locations. Those retail stores saw positive same-stores sales, a key gauge of retail performance, during the quarter, the company said. Sales declines at Dockers were larger than anticipated as core items failed to entice consumers. New Dockers products are being introduced, but management warned the process will be slow.

However sales of the denim brand in Europe were up 10% to $268m for the quarter but were down 4% when currency fluctuations were stripped out.