Levi Strauss Layoffs to Total as Many as 2,865 Workers Amid DTC Focus

Levi Strauss & Co. said it will lay off anywhere from 10 percent to 15 percent of its workforce in the coming months as it eyes direct-to-consumer growth and fewer value plays. 

The San Francisco company said Thursday it expects to conduct the layoffs in the first half of this year. The layoffs equate to anywhere from 1,910 to 2,865 workers companywide, based on headcount figures published in Levi’s annual report. 

“As you make this pivot to a DTC-first company, we become a lot more agile and a lot… smarter from that perspective,” CFO and Growth Officer Harmit Singh said on a call with analysts Thursday of the organization’s coming changes.  

Levi Strauss owns the Levi’s, Beyond Yoga, Dockers and Denizen brands.

The majority of the Levi Strauss workforce, 9,500 employees, are based in the Americas region, according to the company’s annual report. More than half, or 10,200 employees, hold positions in stores. Another 2,100 are distribution center employees, while 5,200 are in what the company called “non-production” positions. 

‘Outsized Growth’ in DTC

The layoffs are part of a two-year plan named Project Fuel aimed at creating efficiencies as the business emerges from a tough year, driven by U.S. wholesale channel struggles. While that business is now improving, the company sees future growth being led by direct-to-consumer. 

“In addition to seeing positive trends in wholesale, DTC continues to drive outsized growth, giving us conviction that now is the time to accelerate our transition to operating the business as a DTC-first company,” said Levi Strauss & Co. President and incoming CEO Michelle Gass during Thursday’s call. 

For the fiscal fourth quarter ended Nov. 26, direct-to-consumer revenue rose 10 percent, excluding the impact of exchange rates. 

Net revenue for Levi Strauss’s full year was flat from the prior year to $6.2 billion. Adjusted net income fell to $441 million from $604 million.

The company also said it will discontinue its less expensive Denizen label in a bid to refocus efforts around its namesake and higher margin businesses. 

“Given a successful rollout of Red Tab in Target, our focus there will be on growing the higher gross margin Red Tab business where we are seeing strong performance in comp doors…. Despite our exit from Denizen, we remain committed to the value segment and to supporting and growing the signature brand,” Gass said.