Levi Strauss to cut up to 15% of corporate workforce in ‘productivity initiative,’ shares slump

Levi, which is prioritizing direct-to-consumer sales over wholesalers, said a new, multiyear “productivity initiative” will include cost-cutting and simplify some operations. The job cuts will cause restructuring charges of $110 million to $120 million in the first quarter, the company said in its earnings statement. 

The shares fell as much as 5.9% in extended New York trading after the announcement. The stock is down 4.8% this year through Thursday’s close, outpacing the decline of the Nasdaq US Small Cap Index over the same period.  

“We are creating a leaner and more agile company to support our future as a DTC retailer,” incoming Chief Executive Officer Michelle Gass said in an interview, referring to sales from Levi-owned stores and its website. She takes over from current CEO Chip Bergh on Jan. 29.

In fiscal 2024, Levi projects adjusted earnings per share of $1.15 to $1.25, below the average analyst estimate of $1.33. Net revenues are expected to rise as much as 3% from the prior year, also below Wall Street’s expectations. 

Gass said the cautious outlook is the result of Levi “planning for uncertainty and volatility in the year ahead in our wholesale business.” Levi said the productivity initiative is expected to last two years and will generate net cost savings of $100 million in 2024 and fuel “long-term profitable growth.” 

The company’s fiscal fourth-quarter earnings per share were slightly above the average analyst estimate. Revenue in the period, which ended Nov. 26, was just below below expectations.

Sales in the crucial holiday months of November and December were stronger than anticipated with a single-digit rise from the prior year, Chief Financial Officer Harmit Singh…