Levi Strauss to cut jobs after projecting bleak 2024 amid weak wholesale business

New York - Levi Strauss forecast annual sales and profit below Wall Street expectations on Jan 25, and said it would cut 10 per cent to 15 per cent of global corporate jobs as the denim maker seeks to rein in costs amid weakness in its wholesale business.

Levi’s has about 20,000 workers globally, with roughly 5,000 corporate employees.

It attributed the weak forecast to plans to exit its Denizen brand and cut back on off-price sales, as well as weaker foreign currency exchange rates and the final liquidation of its Russia business. The company also missed fourth-quarter revenue estimates.

The fallout from an inventory glut in 2023 and consumers feeling the pinch from inflation are a drag on the company’s wholesale channel and outweighing the gains in its direct-to-consumer business.

Levi’s incoming chief executive Michelle Gass said the company’s US wholesale business improved over its last quarter and is expected to show growth in the second half of 2024. But unpredictable consumer demand meant it would continue to be conservative in its outlook, she told investors in a post-earnings conference call.

According to chief financial and growth officer Harmit Singh, phasing out the Denizen brand, which is more inexpensive than other Levi’s products and sells at a lower margin, would allow the company to focus more on expanded product categories, including lighter-weight denim and athletic wear.

Ms Rachel Wolff, an analyst at Insider Intelligence, said: “They want to make (Levi’s) more upscale. It’s a strategic decision as they try to move up-market and appeal to a more premium consumer.”

Mr Singh also told investors that Levi’s is experiencing delays of 10 to 14 days in transit times as a result of continued disruptions to Red Sea shipping. It has shifted some US shipments to the West Coast, a route that avoids the Red Sea and Suez Canal. REUTERS