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KEY TAKEAWAYS
- Levi Strauss plans layoffs of 10% to 15% of its global workforce to cut costs.
- The job cuts are expected to take place in the first half of this year, with the costs of restructuring estimated between $110 million and $120 million.
- Levi Strauss reported its net income fell 57% from a year ago, with revenue stagnating as inflation squeezed consumers.
Levi Strauss & Co. (LEVI) shares lost 1% in early trading Friday after the denim maker announced plans to cut between 10% and 15% of its workforce.
The layoffs are expected to take place in the first half of 2024, with restructuring charges estimated at between $110 million and $120 million in the first quarter. Levi Strauss has about 5,000 corporate employees and roughly 20,000 workers globally.
The move by Levi Strauss comes after others in the retail industry including Macy’s (M) and Wayfair (W) recently announced cuts to staff to reduce costs.
Net revenue is projected to grow between 1% and 3% this fiscal year, Levi Strauss said, with sales dampened by several factors including the decision to exit its Denizen business.
Levi Strauss’s net income fell 57% to $250 million in 2023 from 2022, with revenue stagnant at $6.2 billion, the same as fiscal 2022. The famed jeans maker struggled to recover from an inventory glut in 2023 as cost-conscious consumers, squeezed by inflation, turned away from traditional wholesale channels, offsetting gains from the direct-to-consumer (DTC) business.
President Michelle Gass is due to succeed Chief Executive Officer Chip Bergh on Monday.
Gass said in a release that the company anticipates “significant growth opportunities ahead” by accelerating international growth and DTC, referring to selling denim through its own stores and website.
Levi Strauss shares were 1% lower at $15.60 per share as of about 11:45 a.m. ET Friday. They’re down more than 11% over the past year.