Levi president and chief executive Philip A Marineau, in his first interview since joining the company in last September, provided a progress report of the turnaround he is attempting in an effort to rebuild the world's largest apparel manufacturer.

San Francisco-based Levi has suffered in recent years as demand for its core jeans has waned, having been upstaged by hipper brands including those of Gap Inc, as well as mass-marketed brands sold at chains such as JC Penney Co and Sears, Roebuck & Co Levi's sales peaked at $7.1 billion in 1996, then fell to $6.9 billion in 1997 and to $5.96 billion in 1998.

The lacklustre 1999 sales came at a time when the company's debt ballooned to $1.8 billion, after Levi had incurred some $1.3 billion in restructuring costs since 1997, connected with the closing of about 28 plants in the US and abroad that resulted in thousands of layoffs to trim its work force to about 23,000 employees.

As Moody's Investors Service Inc and Standard & Poor's Ratings Service lowered their credit ratings on the company's debt, Levi was forced to renegotiate with its bankers, led by Bank of America Corp, forcing it to secure its new credit lines with its famous Levi Strauss trademark.

``All cost savings are now in place,'' said Marineau, 53 years old, the former president of PepsiCo Inc's North America division. ``I expect no further layoffs or plant closings or major cutbacks in the next two years,'' he said. Levi's challenge is now ``operational excellence,'' he said, in describing the company's goal to refocus its product lines and to improve delivering merchandise to retailers.

With a full 70 per cent of Levi's merchandise centred around replenishing its core jeans and basics, he said that Levi is focused on meeting the goal by midyear of getting such merchandise into stores on time. Marineau said he expects a turnaround of the closely held company to occur in two to three years.

Marineau said Levi's has hired Karen Duvall, a former executive at Warner-Lambert Co, to be its senior vice president of worldwide supply channel, a new position. Levi, whose brands include Dockers casual pants and the dressier Slates casual sportswear, encompasses about 65,000 so-called stock-keeping units a huge number of styles and versions that must be manufactured and delivered to stores at the right time in all the right sizes.

He said the 1999 sales drop stemmed in part from ``confusion'' that came as Levi began using more contractors here and abroad, coupled with higher inventories and lower sales. Marineau said that Levi is poised to grow now that it has about 70 per cent to 80 per cent of its costs as variable costs instead of fixed costs, when it operated more factories. Despite the slower sales, Levi is now ``exceeding all the requirements'' of its debt covenants, he said.

This year, Levi's is unveiling a number of new products, including its ``engineered jeans,'' ergonomically designed to follow the shape of the human body. The marketing and advertising will focus on the actual products, rather than ``attitude,'' Marineau said, in order to appeal to consumers of all ages and not just the market for trendy 18-to-24-year-olds.

(The Wall Street Journal)