Levi Strauss to cut global workforce by 10 to 15 percent in 2024

As part of its first phase of the global productivity initiative, Levi Strauss plans 10 to 15 percent reduction of the global corporate workforce. As a result, the company expects to record estimated restructuring charges of 110 to 120 million dollars in the first quarter.

Fourth quarter revenues at Levi Strauss of 1.6 billion dollars increased 3 percent on a reported basis and 2 percent on a constant-currency basis versus Q4 2022. Net income for the quarter decreased to 127 million dollars, while adjusted net income rose to 179 million dollars. Diluted earnings per share were 32 cents and adjusted diluted earnings per share increased to 44 cents.

“While 2023 was a challenging year, we ended on a strong note and I am optimistic about the future. I couldn't be more confident in Michelle as my successor, and together with the rest of our team, they position the company to thrive in its next phase of growth,” said Chip Bergh, president and chief executive officer of Levi Strauss & Co.

“We have a strong pipeline of newness and innovation launching this year to fuel consumer demand. 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 DTC,” added Michelle Gass, president and incoming chief executive officer of Levi Strauss & Co.

Highlights of Levi Strauss’ Q4 results

The company’s DTC (direct to consumer) net revenues increased 11 percent on a reported basis and 10 percent on a constant-currency basis, driven by broad-based growth in both company-operated mainline and outlet stores and e-commerce.

Net revenues from e-commerce grew 19 percent on a reported basis and 17 percent on a constant-currency basis primarily reflecting double-digit growth across regions for the Levi’s brand.

Wholesale net revenues declined 2 percent on a reported basis and 3 percent on a constant-currency basis, as growth of the Levi’s brands in the U.S. and Asia was offset by a decline in Europe.

In the Americas, net revenues increased 6 percent on a reported basis and 4 percent on a constant-currency basis inclusive of 4 percent growth in the U.S. DTC net revenues increased 12 percent on a reported basis and 10 percent on a constant-currency basis driven by company-operated mainline and outlet stores and e-commerce. Wholesale net revenues increased 3 percent on a reported basis and 1 percent on a constant-currency basis reflecting growth in the U.S. from Levi’s and Signature. Operating income for the segment increased 50 percent.

In Europe, net revenues increased 2 percent on a reported basis and decreased 2 percent on a constant-currency basis; excluding Russia, net revenues increased 1 percent on a constant-currency basis. DTC net revenues increased 12 percent on a reported basis and 7 percent on a constant-currency basis, and 10 percent excluding Russia, driven by company-operated mainline and outlet stores and e-commerce. Wholesale net revenues decreased 7 percent on a reported basis and 10 percent on a constant-currency basis, and 7 percent excluding Russia. Operating income for the segment increased 5 percent.

Asia net revenues increased 4 percent on a reported basis and 7 percent on a constant-currency basis, reflecting growth across almost all markets, including China. DTC net revenues increased 7 percent on a reported basis and 11 percent on a constant-currency basis. Wholesale net revenues increased 1 percent on a reported basis and 3 percent on a constant-currency basis. Operating income for the segment increased 7 percent.

Other brands net revenues decreased 11 percent on a reported basis and 13 percent on a constant-currency basis. Dockers decreased 18 percent on a reported basis and 20 percent on a constant-currency basis as growth internationally and in DTC was offset by continued softness in U.S. wholesale. Beyond Yoga increased 14 percent on reported and constant-currency bases.

Levi Strauss FY23 revenues remain flat

For fiscal 2023, the company’s reported net revenues of 6.2 billion dollars were flat to FY 2022, and flat on a constant-currency basis.

Gross margin was 56.9 percent, adjusted gross margin was 56.9 percent, 70 basis points below FY 2022. Net income was 250 million dollars and adjusted net income was 441 million dollars, down from 604 million dollars in FY 2022.

Diluted EPS was 62 cents; and adjusted diluted EPS was 1.10 dollars, down from 1.50 dollars in FY 2022.

The company returned 199 million dollars in capital to shareholders.

For fiscal 2024, the company forecasts reported net revenues growth of 1 percent to 3 percent year-over-year, and adjusted diluted EPS of 1.15 dollars to 1.25 dollars.