Global Layoffs and Increase in Sales
Levi Strauss, the San Francisco-based jeans maker, has announced a two-year restructuring plan that includes global layoffs. This initiative comes as the company reported an increase in sales during the fourth quarter, driven by a return to growth in the Americas.
To boost global productivity, Levi Strauss plans to reduce its global corporate workforce by 10% to 15% in the first half of the year. The company aims to rightsize its structure and enhance productivity at its stores.
Fourth Quarter Performance
In the fourth quarter, Levi Strauss achieved a net income of $126.8 million, or 32 cents a share, compared to $150.6 million, or 38 cents a share, for the same period the previous year. Excluding one-time items, the company’s earnings per share were 44 cents, surpassing analysts’ expectations of 43 cents.
While sales rose by 3.3% to $1.64 billion, it fell short of analysts’ projected $1.66 billion.
Revenue Growth and Future Outlook
Levi Strauss attributes its overall results to a return to revenue growth in the Americas. The company achieved this by reducing wholesale prices by 5% to 6% at the end of the third quarter. However, Levi Strauss does not plan on implementing further price reductions.
Looking ahead, the company forecasts revenue growth of 1% to 3% for the current year and expects adjusted earnings per share between $1.15 and $1.25.
Restructuring Plan and Financial Implications
Levi Strauss’s two-year turnaround plan is anticipated to generate savings of $100 million by fiscal 2024. As part of this plan, the company expects to incur restructuring charges of $110 million to $120 million in the first quarter.
Despite the positive momentum witnessed in the US and Europe, Levi Strauss remains cautious about the future.
Leave a Reply