Friday, July 28, 2006

7 Million Pounds of Denim at Big K

Kmart is transporting over 3700 tons of denim to their 1,400 stores for the back-to-school shopping season, according to the Sears Holdings Corporation, which owns the mass merchandiser.

"'Jeans are the uniform-of-choice for kids of all ages and are actually one of the toughest things mom has to buy for her kids because fit and style are such a personal decision,' said Lisa Schultz, executive vice president, Sears Holdings Apparel Design."

Kmart sells a mix of their own private label jeans and brands like Levi Strauss Signature and Wrangler.

Press Release - Yahoo Finance

Thursday, July 20, 2006

Can of Jeans

Hypebeast is reporting that the Hanon-Shop will be selling the Levi's Vintage Clothing (LVC) Tow Rope Jean, complete with an oil can packaging. Each pair of these selvedge, ultra-distressed, hand-numbered, limited edition 501s comes with an interesting story.

According to the LVC site: "In March 1938, in an area of California just south of San Francisco, a man saw his neighbor's car stranded by the side of the road. As he didn't have any rope, he took his old Levi's 501 Jeans from the trunk, and safely towed his neighbor's car to the next village. This limited edition pair is a faithful replica of those jeans and comes in a 1920s oil can containing the reproduction of the letter that he sent to tell us the amazing story."

The collectible factor is through the roof. How much??

UPDATED 7/22/06: Hanon-Shop made this available today, which also happens to be my birthday. Feel free to pick up one or ten of these for me. They're only 294.95 GBP plus S&H...

Levi's 1933 501 Tow Rope Product Page

Wednesday, July 19, 2006

Swift Galey's New President of International Marketing

Fibre2Fashion has reported:

"SWIFT GALEY has named Rick Waide to the new position of President, International Marketing (IM). Mr. Waide will be responsible for managing customer relations and supply chain management for markets outside of the U.S., as well as the U.S. Jeanswear Division.

His primary objective will be to continue international expansion through leveraging the twill, corduroy and poplin product lines manufactured at the state-of-the-art Swift Galey Lucky facility in Yixing City, China.

His responsibilities will also include delivery of products from the new Swift Galey Lucky denim manufacturing facility currently under construction. Mr. Waide will relocate to Hong Kong and operate out of Swift Galey’s new corporate office.

One of the leading US producers of denim, SWIFT GALEY also makes twill, poplin, and corduroy for major retailers including Abercrombie & Fitch and Gap. It operates four divisions, with denim sold in each of them: jeans, specialty fabrics for the home, sportswear, and uniforms.

In 2004 the company (then known as Galey & Lord) entered Chapter 11 bankruptcy protection for the second time since 2002. In November 2004 New York-based investment firm Patriarch Partners LLC bought Galey & Lord for approximately $188 million."


Tuesday, July 11, 2006

Levi Strauss & Co. Q2 Results

The company just announced their second quarter financial results. There will be an investor conference call live broadcast today at 7 a.m. Eastern Time via their website.

Hot release: Levi Strauss & Co. (LS&CO.) today announced financial results for the second quarter ended May 28, 2006 and filed its second-quarter 2006 Form 10-Q with the Securities and Exchange Commission.

Net revenues for the second quarter were $953 million compared to $962 million for the same quarter in 2005, approximately a 1 percent decrease on a reported basis and flat on a constant-currency basis. Net revenue reflects lower European and U.S. Levi Strauss Signature brand sales, largely offset by increased U.S. Dockers and U.S. Levi's sales and continuing growth in the Asia Pacific business.

Net income for the second quarter increased 50 percent to $40 million compared to net income of $27 million in the same quarter of 2005. The improvement was primarily due to a $32 million discrete income tax benefit recognized during the second quarter of 2006, a $10 million decrease in loss on early extinguishment of debt during the 2006 period and lower interest expense, partially offset by lower operating income.

"We made good progress during the quarter," said Phil Marineau, chief executive officer. "Revenues stabilized and our net income improved. Looking at the business regionally, I'm particularly pleased with the growth in our U.S. business. We continue to transform our European business, and I'm optimistic that the region's revenue trends will improve during the balance of the year. And the Asia Pacific business continued its strong revenue and profit performance."

Second-Quarter 2006 Results

Gross profit decreased 4 percent to $438 million compared to $455 million in the second quarter of 2005. Gross margin was 46.0 percent of revenues for the second quarter of 2006 compared to 47.4 percent of revenues in the same period last year. The reduced gross margin in the 2006 period was primarily due to Europe and the U.S. Levi's and Dockers brands as a result of changes in sales mix, increased investment in products and higher sales allowances to support customers' marketing efforts, partially offset by an improvement in the margin for the U.S. Levi Strauss Signature brand.

Selling, general and administrative expenses increased 3 percent or $9 million to $317 million in the second quarter of 2006 from $308 million in same period of 2005. Higher SG&A expenses in the 2006 period were primarily attributable to higher selling expense associated with new company-operated Levi's Stores in Europe and the United States, the impact of reversing a litigation reserve in the second quarter of 2005, and additional long-term incentive compensation expense during the 2006 period. These increases were partially offset by lower advertising and promotion expenses and lower distribution costs.

Operating income for the quarter decreased $30 million to $115 million compared to $145 million in the second quarter of 2005. The decrease was primarily driven by lower operating income in Europe due to lower net sales and higher SG&A, partially offset by increased operating income in the U.S. Levi Strauss Signature, Asia Pacific and Mexico/Canada businesses.

Interest expense for the second quarter of 2006 decreased 7 percent to $62 million compared to $66 million in the prior year period. The decrease was primarily attributable to lower interest rates and lower average debt balances during the 2006 quarter.

Income tax for the quarter was a $17 million benefit compared to a $9 million expense in the 2005 period. The income tax benefit in the 2006 period is primarily attributable to the recognition of a $32 million discrete tax benefit arising from a change in subsidiary structure. The company expects the estimated annual effective income tax rate for Fiscal Year 2006 to be 42% compared to an actual annual rate of 45% in 2005.

"I'm encouraged by our growth in North America and Asia and our progress in Europe," said Hans Ploos van Amstel, chief financial officer. "We continue to deliver strong margins while investing in our business. This, together with our working capital improvement, continues to yield strong free cash flow, which remains our key focus."

Levi Strauss & Co.

Monday, July 10, 2006

Women's Denim Trend in Japan

This is interesting: according to LeBiz Tokyo, the fashion consulting team that runs Fashion in Japan, eastside Japan and westside Japan are at odds about which direction women's fashion denim should go. While the women of Osaka in the west are buying up baggy cuts their cosmopolitan Tokyo counterparts in the east are into slim, skinny cuts.

LeBiz: "So the result is that the ladies denim is split into 2, and department stores are facing a risk. As those in Osaka are predicting that baggy will still exist for autumn, and those in Tokyo are voting for the skinny style. Many department stores have started making special orders to foreign brands in making baggy short pats, more skinny pants and etc.

A significant factor in the reality of this prediction is the movement of tops and boots. These trends can alter the denim trend tremendously, and retailers are aware of it. Still, those in Osaka predict that boots cut will comprise 60 percent, baggy 20 percent, skinny/slim 15 percent, and gaucho at 5 percent."

LeBiz Tokyo - Fashion Consulting

Friday, July 07, 2006

Levi's CEO Retiring

The 58-year-old CEO plans to retire this year, after nearly 7 years as captain of the Levi Strauss ship.

Levi's PR:

Philip A. Marineau, chief executive officer of Levi Strauss & Co. (LS&CO.), announced that he plans to retire from the company at the end of 2006. He also said that John Anderson, currently president of LS&CO.'s Asia Pacific Division and president of the company's global supply chain organization, has been promoted to chief operating officer, effective immediately.

"The timing is right," said Marineau. "I have accomplished what I set out to do and have the opportunity now to turn over the operations of the company to the next generation of leadership. The business has turned around from when I joined more than six years ago and is in much stronger financial shape. We have transformed LS&CO. from being primarily a jeanswear manufacturer into a highly competitive global marketer and distributor of apparel."

Marineau added, "I am announcing this now in order to ensure a smooth transition. During the next several months, I will continue to work side-by-side with John Anderson as he assumes the chief operating officer role. Based on more than 27 years of experience, John is the ideal apparel executive to lead the company's widespread operations. I will stay fully engaged in the business until the end of the calendar year working with John and our leadership teams worldwide to build on our momentum in the marketplace and bring our business plans to fruition."

"Phil has led LS&CO. through a successful business turnaround, and he will be leaving an impressive legacy of achievement," said Bob Haas, the company's chairman. "Thanks to Phil, we have significantly improved our competitiveness across all dimensions of the business. Our upgraded Levi's and Dockers product lines are resonating with consumers again, and with the launch of the Levi Strauss Signature brand we have expanded our market reach to include value-conscious shoppers in the sizeable mass channel. Additionally, under Phil's leadership the company today is more disciplined, focused and efficient, resulting in faster responses to marketplace trends and more reliable service to our retail customers.

Haas added, "Phil has assembled a talented management team, blending experienced LS&CO. veterans and new leaders who add needed skills. The board of directors, shareholders and I deeply appreciate Phil's dedicated service and important contributions to the company. We feel confident that his leadership team will continue to build on the strong foundation that Phil has established."

Haas said that the company's board of directors would be meeting within the next two weeks to reaffirm the company's CEO succession plan and discuss the timing of naming Marineau's replacement.

John Anderson, 55, has been leading the Asia Pacific Division since 1998 and the company's global supply chain organization since March 2004. In addition to the markets throughout Asia Pacific, the division includes Latin America, the Middle East and Africa. Anderson joined LS&CO. in 1979 as a product manager in Australia. He was promoted through a series of increasingly responsible merchandising positions in Europe and the United States, including vice president, merchandising and product development for the U.S. Levi's brand in 1995. Anderson served as general manager of Levi Strauss Canada and as president of Levi Strauss Canada and Latin America from 1996 to 1998. He also was the interim president of Levi Strauss Europe from September 2003 to February 2004.

"John Anderson is recognized both within the company and throughout the apparel industry as an exceptionally talented and accomplished senior leader," said Marineau. "He and his Asia Pacific Division team have delivered five consecutive years of double-digit revenue growth and six years of double-digit profit growth. John is a catalyst for innovation and has a record of inspiring teams to achieve peak performance. As a result, he has earned the respect of the board and our suppliers, customers and employees. We are fortunate to have him as our new chief operating officer."

Levi Strauss & Co.

Thursday, July 06, 2006

Levi's Green Jeans

When the biggest player in denim goes organic everyone in the industry should take a closer look at the treehugger market. According to, "organic cotton is reported to be only a $50 million dollar bump in a $200+ billion dollar cotton market; but, organic cotton demand has been increasing over 20% a year, following the hundreds of US brands offering organic cotton items." A report from suggests global sales of organic cotton products will reach $2.6 billion by the end of 2008.

Here's Levi's spin:

The Levi's brand today announced it will include jeans made with 100% organic cotton in its fall 2006 product line. Organic cotton will be used in select new and popular men's and women's styles within its Red Tab and, the recently launched, Levi's Capital E lines. The jeans will be identified as "Levi's Eco" and be available in November 2006 exclusively at Levi's U.S. stores with additional products to be introduced in spring 2007.

"As the inventor of the jeans category, it is critical for us to continue to innovate with our products and within the category itself in order to drive positive change," said Robert Hanson, Levi's U.S. brand president. Building off the brand's world-famous product guarantee, Quality Never Goes Out of Style, Hanson added, "Given our history as a leader in responsible manufacturing and business practices, this initiative is about quality and responsibility never going out of style. With Levi's Eco, consumers who seek to minimize their personal impact on the environment can choose jeans that demand less from the environment without forfeiting the style or quality they've come to expect from the Levi's brand."

Famous for style leadership and its product iconography, Levi's jeans made with organic cotton will be available in a range of popular fits and finishes and marked with a few subtle identifiers. Jeans made with all, or a significant percentage of, organic cotton will be signified as "Levi's Eco" and feature an embroidered lowercase "e" inside the front pocket, or at the bottom of the right leg of each jean. A natural colored canvas "Levi's" tab and "Two Horse Patch" made from 100% organic fabric as well as natural colored pocket stitching of the brand's famous arcuate will also indicate the jeans are made from organic cotton. All external packaging will be made from organic fabric or recycled paper and printed with soy-based ink.

Among the styles made with 100% organic cotton are the Red Tab Vintage Straight Jean for men, and the women's Skinny Jean and Skinny Knee Knocker Short. In the brand's super premium line, Levi's Capital E, a selvedge denim Shrink-to-Fit 501 Original Jean, and forward fits like the men's Wrapped Skinny Jean and Skinny Slouch jeans, and the women"s Twisted Skinny and Twisted Cropped jeans will be made from 100% organic cotton. Other elements of the Levi's Capital E lines including the use of recycled buttons, rivets and zippers and natural indigo to dye some styles of jeans were employed for their minimized impact on the environment.

Global Organic Jeans Offering

The fall U.S. introduction is part of a global launch of products made with 100% organic cotton. In Europe, the Levi's brand will offer certified organic denim versions of its most popular styles - the Levi's 506 Standard Fit Jean for guys and the Levi's 570 Straight Fit Jean for girls. They will be available in select stores within Europe at the end of 2006. Additional styles made from 100%, or a significant percentage of, organic cotton will be introduced in both regions in 2007.

Levi Strauss & Co.