Levi Strauss to buy stores from Anchor Blue

SAN FRANCISCO, May 27 (Reuters) - Levi Strauss & Co [LEVST.UL] said on Wednesday it entered into an agreement to buy the operating rights to 73 Levi's and Dockers Outlet stores operated by Anchor Blue Retail Group Inc, which is filing for bankruptcy.

Anchor Blue and its subsidiaries said they had filed for bankruptcy protection and asked the court to allow the sale. They cited the U.S. recession that has severely affected its key market of California as eroding profitability.

Levi Strauss, the San Francisco-based jeans giant, said the proposed deal would be a "profitable growth opportunity" for the company.

"We believe that this transaction will strengthen our ability to manage our brands' positioning effectively in the outlet channel," said Robert Hanson, president of Levi Strauss Americas.

Anchor Blue, which operates stores under that name, said it secured $20 million in debtor-in-posession financing from Wachovia Capital Finance to be used for working capital during the reorganization.

It said it would close about 50 underperforming stores in nine U.S. states, the bulk of which are in California and Florida.

"The unprecedented sustained economic downturn and a related drop in consumer spending, especially in the teenage market, have had a severe impact on our financial performance," said Anchor Blue Chief Executive Thomas Sands. (Reporting by Alexandria Sage; Editing by Andre Grenon)