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Levi's boosts profits after spending cuts

Denim giant Levi’s profits jumped in its first quarter as the company made efforts to cut back on spending to help boost income.

In the three months to February 26 profits were 21% up from $40.7m (£25.6m) in the same period last year to $49.2m (£31.0m). The rise in profits was boosted by cuts in selling, general and administrative costs, particularly in advertising and promotion. The company also increased its own product prices in response to the rise of the cost of cotton.

The brand reported a 4% rise in revenues for the first quarter of 2012 from $1.12bn (£704m) to $1.16bn (£730m).

The European region saw a 7.4% decline to $289m (£182m) due to the tough retail environment, but this was offset by a 9.3% increase in volume in the Americas, to $647m (£407m) and a 5.1% increase in Asia-Pacific sales to $228m (£143m).

Blake Jorgensen, chief financial officer said: “While we remain focused on delivering improved operating margins along with revenue growth, we will continue to be pressured by high cotton costs through at least the second quarter, and over the next few quarters we will incur organisational transition costs as we position the company for long-term profitable growth.”

He added that the reduction in spending was an “evolutionary process”. “It’s something that comes through controlling our spending as much as it is actively reducing spending,” he said.

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