Levi Strauss : cutting its global workforce by up to 15%

NEW YORK (AP) — Denim giant Levi Strauss & Co. said Thursday that it’s slashing its global corporate workforce by 10% to 15% in the first half of the year as part of a two-year restructuring plan that seeks to cut costs 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.
San Francisco-based Levi’s 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.

Update Feb 27, 2024

Levi Strauss announced the difficult but necessary step of reducing its workforce to address its cost structure; in most countries workforce actions will take place this week

• "During Q4 earnings in January, we announced that one aspect of this work would involve the difficult but necessary step of reducing our workforce to address our cost structure. In most countries, workforce actions will take place this week. Where required by local laws, including in some European countries, we will first engage in consultation processes with works councils and local employee representatives, which will affect the timelines in those countries.
• I want to acknowledge how tough these past few weeks have been and thank you for your continued hard work and dedication during a time of uncertainty. The prospect of layoffs and having to say goodbye to valued colleagues is always difficult, but we have a responsibility to all our stakeholders to operate our business so it can thrive over the long term. Unfortunately, our costs have been growing faster than our revenue, which is not sustainable for us or for any company. Continuing this way would further burden us with excess operating costs, make us less competitive and slow our progress toward a DTC-first future.
• While workforce reductions will deliver a significant part of the savings that we described in our last earnings call, it is one step in a larger process to change the way we operate and improve the performance of our business. We are also taking action to advance our long-term strategies, specifically:
  • To expedite our pivot to being DTC-first, we are revamping our global operating model and go-to-market process. In essence, we are rewiring and improving the entire end-to-end process, reshaping our company and positioning us to better meet the expectations of our consumers.
  • To accelerate assortment productivity, provide greater clarity to the consumer and create more focus for our teams, we have activated an initial reduction of 13% across our Levi's product assortment for H1'25 and are deprioritizing footwear in some regions. These efforts, together with the recent decision to exit Denizen, are part of our push to deliver a best-in-class consumer experience, focus on higher-margin products and improve working capital management.
  • To achieve greater retail productivity in the U.S., we are taking a deep look at our labor allocation, sales effectiveness and inventory management. We will be rebalancing store teams and removing some management layers, which will result in the elimination of a small number of store leadership positions.
  • To leverage global capabilities and gain additional cost savings, we are looking at centralizing some work at global capability centers like the one we have successfully established in Bangalore.
  • To drive greater impact and efficiency, we are considering the consolidation of North and South Europe into a single European cluster while maintaining country-focused teams where resources need to be closer to consumers."