Levi’s to cut up to 15% of its staff amid restructuring plan

The denim giant announces layoffs as part of a cost-cutting strategy

Levi Strauss & Co., the iconic American jeans maker, said on Thursday that it will slash its global corporate workforce by 10% to 15% in the first half of the year as part of a two-year restructuring plan that aims to reduce expenses and simplify its operations. The company employed about 19,100 people as of the end of November, according to its annual report filed with securities regulators.

The company said the restructuring is expected to generate net cost savings of $100 million in the current fiscal year. It estimates it will book charges of $110 million to $120 million in the first quarter and said there could be more restructuring charges ahead.

Levi’s announced the layoffs as it reported fourth-quarter earnings that beat analysts’ expectations. The company’s net revenue was up 3% to $1.64 billion in the quarter that ended Nov. 26, driven by strong growth in its online and direct-to-consumer channels. The company’s adjusted earnings per share were $0.34, compared to $0.20 in the same period a year ago.

The company faces challenges from the pandemic and changing consumer preferences

The denim giant, which was founded in 1853 and went public in 2019, has been facing challenges from the COVID-19 pandemic and the shift in consumer preferences away from jeans and toward more casual and comfortable clothing. The company’s sales declined by 23% in the fiscal year 2023, and it posted a net loss of $127 million, compared to a net income of $395 million in the previous year.

The company has been trying to adapt to the changing market by expanding its product portfolio, investing in digital capabilities, and strengthening its direct-to-consumer channel. The company said it increased its online penetration from 15% to 26% of its total revenue in 2023, and it opened 80 new stores and shop-in-shops globally.

The company also said it is focusing on growing its presence in emerging markets, especially China and India, where it sees significant opportunities for growth. The company said it grew its revenue by 38% in China and by 17% in India in the fourth quarter.

The company hopes to emerge stronger and more profitable from the restructuring

The company said the restructuring plan is designed to help it emerge stronger and more profitable from the pandemic and the changing consumer landscape. The company said it will streamline its organizational structure, optimize its global footprint, and leverage its scale and capabilities to drive efficiency and effectiveness.

The company said it expects to achieve annualized gross savings of $200 million to $220 million by the end of 2024, and it will reinvest some of the savings into growth initiatives and innovation. The company said it will also improve its operating margin and cash flow generation.

The company’s CEO, Chip Bergh, who has been leading the company since 2011, said he is confident that the company will overcome the challenges and deliver long-term value to its shareholders, customers, and employees. Bergh will retire in late April and will be succeeded by Michelle Gass, who joined the company as president in January 2023 after serving as the CEO of Kohl’s.

The company extends its naming rights deal for Levi’s Stadium

The company also announced on Thursday that it has reached a proposed 10-year extension to the naming rights deal for Levi’s Stadium, the home of the San Francisco 49ers. The deal is worth a combined $170 million and is subject to approval by the Santa Clara Stadium Authority’s board, which is expected to be granted on Tuesday. It will give Levi’s the stadium’s naming rights through the 2043 NFL season.

The company said the extension reflects its commitment to the Bay Area and its long-standing partnership with the 49ers. The company said it will continue to leverage the stadium as a platform to showcase its brand and products, and to engage with its fans and customers.

The company also said it will support the 49ers’ efforts to host major events at the stadium, such as the Super Bowl, the College Football Playoff National Championship, and the FIFA World Cup.