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Portland suits Levis new strategy

• Sagging sales spur an updated approach for the original king of bluejeans

It just might be the perfect fit.

Jeans maker Levi Strauss & Co. has opened a flashy new store in the 5,500-square-foot space at 2307 N.W. Westover Road, the site of three failed restaurants in as many years.

The San Francisco-based company, which closed a downtown Portland store in 1998 because of poor sales, is making its comeback here in the Thiele Square retail complex at the busy intersection of Northwest 23rd Avenue and West Burnside Street.

Not far from the trendy Pearl District with its shops, cafes and art galleries, the location should attract the kinds of shoppers that Levi Strauss is hoping to capture Ñ young people and women who seek out specialty shops, said Diane Padoven, the company's vice president in charge of retail, who was in Portland last week for a grand-opening ceremony.

Portland's is the first of four stores that Levi Strauss is opening around the country this year featuring a splashy new design and jeans line called Levi's Type 1.

'We specifically designed this (Portland) store with the shopper in mind,' Padoven said. 'This location fit our portfolio (strategy).'

The store site has been vacant for nearly a year since Fado Irish Pub closed, suffering the same fate as its predecessor, Tir Na Nog, another Irish-style pub that had replaced California Pizza Kitchen, a casual-dining restaurant.

After the demise of three restaurants, the building's owner, Giustina Resources in Eugene, decided that a retail store might be a better fit with the square's other occupants: Cost Plus World Market, The Gap, Sunglass Hut International and the clothing store Timbuktu, said Mert Meeker of MBM Properties Inc., who leased the space to Levi Strauss.

'We liked the new-concept store the company is rolling out nationwide,' he said. 'It's a very contemporary store, with wide appeal to young people.'

Though he would not reveal the cost, Meeker said the space was extensively renovated. The restaurant interior was demolished, and a new concrete floor was installed. Costs were shared by the Atlanta-based owner of Fado and Levi Strauss.

After more than six years of declining revenues, the privately held Levi Strauss has embarked on a rebuilding strategy that includes introducing the new Levi's Type I line.

Stores are also opening in New York City's SoHo neighborhood, Miami and Santa Monica, Calif. The company has 12 other stores around the country, four of which are being remodeled to incorporate the new design. Levi's also has factory outlet stores.

Next generation

The idea is to re-establish Levi's as an American icon, said Levi's brand President Robert Hanson, who was in Portland for the grand opening.

The company, which is 150 years old this year, was the first to introduce jeans and other denim wear.

'But we didn't keep an eye on the next generation (of younger shoppers) that demands constant innovation,' said Hanson, who served as the company's brand president in Europe from 1998 to 2001.

The new stores carry a wide range of Levi's styles and sizes, heavily promoting the new Type 1 line of jeans, skirts, jackets and tops. Type I style Ñ which uses bolder, oversized versions of such traditional jeans features as buttons, rivets, stitching and labels Ñ is 'a blend of (Levi's) heritage with modernity,' he said.

Upscale, downscale

The Northwest Portland store offers jeans that range from around $40 for basic styles to $200 a pair for Levi's 'Vintage' brand Ñ a limited line of clothing replicating styles from past generations.

Later this year, Levi Strauss will begin selling a less expensive line of jeans called Levi's Signature in some discount chain stores, including Wal-Mart.

The new Portland store employs a staff of 21, said manager Tara Olfert.

Levi Strauss is betting that its expensive retooling effort will turn the company around, Hanson said.

During the fourth quarter, which ended Nov. 24, revenues fell 29 percent, though net sales for the quarter grew 2 percent, to $1.3 billion from $1.2 billion in the previous year.

For fiscal 2002, its net income fell 83 percent, to $25 million from $151 million a year earlier. Levi's sales declined for the year by 3 percent, from $4.3 billion in 2001 to $4.1 billion in 2002.

The losses were caused by plant closings and work force reductions that have been ongoing since 1997, according to a year-end report released last month.

'I admire them for taking any approach (in this slow business climate) that they think will improve their business,' said Burton Nudelman, a Portland retail management consultant. 'It's a style change. It's another way to replace an old story.'

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