With new management coming in after troublesome 2023, Levi Strauss & Co. on Thursday introduced plans to put off workers and reduce prices over the following few years — a part of a multi-year “global productivity initiative” that didn’t do a lot for the long-lasting jeans-maker’s share worth following a disappointing revenue forecast.
stated it might lay off between 10% and 15% of its international company workers within the first half of this yr. Executives stated they anticipated the initiative to avoid wasting $100 million in prices in its fiscal 2024, which ends in November.
The cuts and financial savings plan got here as Chief Executive Chip Bergh prepares to depart from that function and hand the reins to Michelle Gass, who will take over on Jan. 29. Levi’s can also be making an attempt to promote extra of its personal denim on to consumers by way of its personal bodily shops and on-line gross sales community, as outdoors chain retailers stay cautious on stocking up an excessive amount of on new clothes following almost two years of muted demand.
“We have a strong pipeline of newness and innovation launching this year to fuel consumer demand,” Gass stated in Levi Strauss’s fourth-quarter earnings launch on Thursday. “And I am confident in the significant growth opportunities ahead for this company — including accelerating international growth, becoming a denim-apparel lifestyle business, and leading with” Levi’s direct-to-consumer enterprise.
Still, shares fell 2.5% after hours, after administration forecast full-year adjusted per-share revenue that was beneath Wall Street’s expectations.
Levi’s stated it anticipated to earn $1.15 to $1.25 for its full yr. That was beneath FactSet forecasts for $1.33. The firm expects full-year gross sales progress of 1% to three%.
Levi’s outcomes — and the roadmap it laid out for higher income — comply with a number of different corporations which have introduced job cuts this month, as extra corporations look to protect their revenue margins. Levi’s working margins within the fourth quarter rose to 9.2% from 8.6% in the identical quarter in 2022.
The plans additionally echoed people who sneaker and athletic gear-maker Nike Inc. introduced in December. Nike
stated it might search as much as $2 billion in price cuts over the following three years. And it stated it was leaning on “newness and innovation” to draw consumers who, as a result of larger costs for requirements, haven’t been as keen to spend so much on new footwear and garments. One analyst stated that technique wasn’t working.
Levi’s has been hoping its larger brand-name will assist it overcome these difficulties. For the fourth quarter, the corporate reported gross sales of $1.6 billion, up 3% yr over yr. Levi’s reported adjusted earnings per share of 44 cents. Analysts polled by FactSet anticipated Levi’s to report adjusted earnings per share of 43 cents, on income of $1.66 billion.
Its direct-to-consumer gross sales — or gross sales from its personal shops and e-commerce — jumped 11% within the fourth quarter. Those gross sales made up a barely larger chunk of total income, at 42%, than throughout the identical quarter in 2022.
However, wholesale revenues — or the gross sales Levi’s will get when retailers purchase its clothes and promote it to individuals procuring of their shops — fell 2%. In that section, administration stated “growth of the Levi’s brands in the U.S. and Asia was offset by a decline in Europe.”
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