Levi Strauss to Cut Jobs After Projecting Bleak 2024 on Fragile Wholesale Business

Levi Strauss & Co forecast annual gross sales and revenue under Wall Avenue expectations on Thursday, and mentioned it could minimize 10 p.c to fifteen p.c of world company jobs because the denim maker seeks to rein in prices amid weak point in its wholesale enterprise.

Shares of the corporate fell greater than 5 p.c in prolonged buying and selling.

Levi blamed its plan to exit its Denizen model and in the reduction of on off-price gross sales this 12 months for the weak forecasts whereas additionally lacking fourth-quarter income estimates.

The fallout of a listing glut final 12 months and a pressured low-income shopper are weighing on the corporate’s wholesale channel and neutralising the features in its direct-to-consumer (DTC) enterprise from sturdy demand from higher-income shoppers.

“The worth-conscious shopper is beneath strain … despite the fact that we have now respectable momentum as we enter 2024, our outlook is cautious,” Chief monetary and progress officer Harmit Singh mentioned in an interview.

Levi’s whole wholesale enterprise, which accounted for about 62 p.c of its web revenues in 2022, noticed gross sales dip 3 p.c on a constant-currency foundation within the quarter ended Nov. 26.

The phase-out of Denizen model, which is cheaper than the Levi’s model and sells at a decrease margin, will help the corporate’s premiumisation plans, develop its assortment of higher-priced denim and add different classes resembling athletic put on, Singh mentioned.

The layoffs are set to happen within the first half of 2024, and, coupled with extra DTC-focused initiatives, would generate web value financial savings of $100 million in 2024.

The corporate will take a $110 million to $120 million cost associated to the job cuts within the present quarter.

Levi at the moment has about 20,000 employees globally, with roughly 5,000 company staff.

The corporate projected fiscal 2024 web income progress of 1 p.c to three p.c, in contrast with analysts’ estimate for a 4.7 p.c improve to $6.49 billion, in response to LSEG information.

Levi’s expects adjusted per-share revenue of $1.15 to $1.25, decrease than estimates of $1.33.

By Deborah Sophia; Modifying by Sriraj Kalluvila

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