Levi jeans were a "must have" for many in the 1980s and 90s

The San Francisco-based clothing giant lost $2m in the first three months of 2004, much narrower than the $58m loss in the same period in 2003.

Levi Strauss said its improved performance was due to continuing cost reduction efforts and the success of its new value price Signature range.

The range, sold in mass-market stores in the US, is being trialed by UK retailer Tesco, after resolution of a legal dispute between the two companies.

A Tesco spokeswoman said the new Signature range was proving popular.

"The jeans have only been selling for a couple of weeks, but the early signs are encouraging," she said.

Premium

The collaboration between Levi and Tesco marks a distinct warming of relations between the two companies.

In 2002, Levi won a four-year court challenge to stop Tesco from selling cut-price Levis it had purchased from the so-called "grey market" outside the European Union.

A judge said Tesco's practice was illegal because it did not have Levi's permission.

But Levi's defence of its right to sell at a premium price may have been a mistake.

Levi has now moved all production away from the US

For some years, it has been losing ground to a combination of cheaper price tags in chainstores, and newer brands which made its traditional styles look old-fashioned.

Change of plans

It also failed to follow the lead of firms such as Nike into contract manufacturing overseas, although it has now caught up with the recent closure of the last of its 63 plants in the US.

The result was - wait for it - a radical move to sell a cheaper range through the massive Wal-Mart and Target chains.

It has also updated its look, moving to younger designs such as the "Anti-Fit" range of baggy jeans.