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It's a really bad time to be in low-end apparel. Levis Strauss, which is privately owned but has publicly-traded bonds and therefore reports its earnings, saw its second quarter operating income decline from $118 million to $52 million, driven by an 8% decline in revenue and increased selling, general and administrative costs.President and CEO John Anderson commented that "The retail environment in the United States remained challenging. . . Increasingly difficult economic conditions in many markets worldwide are impacting consumer spending, but our brands remain strong."
The Wall Street Journal reports (subscription required) that the company's bonds that come due in 2015 have fallen to 95.75 cents on the dollar after 5.5 cent drop in the past week -- the debt carries junk ratings and, given the absolute garbage that's rated investment grade these days, that's saying something.
With all the awful reports coming out on fashion and apparel companies lately -- and the beatings the stocks have taken -- you have to wonder whether they're becoming a good contrarian play. People will buy new clothes eventually, won't they?
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Reader Comments (Page 1 of 1)
7-09-2008 @ 12:07PM
speculator said...
We are in a bear market. and most stocks will go down. The economy will weak until we that care of the energy problems. The economy is going to by weak until the United States takes care of its biggest problem. One billionaire calls our biggest problem the %uFFFDLargest transfer of wealth in the history of mankind%uFFFD. Find out who said it and how we correct it
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