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Levi's hammered by global downturn

Levi's saw net income crash from $46 million (£23.3m) to $1m (£507,000) for the second quarter ended May 25.

Levi's blamed the profit fall on lower net sales and higher costs in the US on top of investment in retail expansion.

Levi's sales fell 8% in the period to $936m (£475.3m). However sales of the denim brand in Europe were up 10% to $268m (£136m) for the quarter but were down 4% when currency fluctuations were stripped out. Levi's said that the 4% decline represented weaker wholesale performance in certain European markets but that this was partly offset by sales growth in the company-operated retail network.

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."

Anderson added: "Given the slowing macroeconomic indicators we are seeing globally and our continued investment to stabilize our ERP system, we expect the rest of the year to be challenging. Nonetheless, we are taking decisive actions to position the company well for when market conditions improve."

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