Levi Strauss & Co. is the latest company to implement layoffs as the coronavirus crisis battles retail.
The denim maker announced yesterday plans to cut 15% of its global corporate workforce, or about 700 jobs, in an effort to cut costs. The layoffs are expected to save about $100 million annually, Levi’s said.
For the second quarter ended May 24, Levi’s saw net revenues drop 62% year-over-year, from $1.31 billion to $498 million. Although the retailer saw 25% growth in its e-commerce business, the online gains were not enough to compensate for about 10 weeks of coronavirus-induced store closures, Levi’s said. It posted a net loss of $364 million for the quarter with a loss of 91 cents per share, versus net income of $29 million, or earnings per share of 7 cents, a year prior. The net loss was mostly due to $242 million in restructuring charges, inventory and other costs associated with COVID-19, the company said; excluding one-time charges, its adjusted loss per share was 48 cents. Levi’s ended Q2 with total liquidity of about $2 billion, with $448 million available to tap under its revolving credit line.
“We started the year with strong momentum, but the global pandemic and economic crises had a significantly negative impact on our second quarter results, as our stores and most wholesale doors were closed around the world for the majority of the quarter,” Levi’s president and CEO Chip Bergh said in a statement.
As of Tuesday, Levi’s had reopened approximately 90% of its owned doors and franchisee doors globally, with the majority of third-party retail locations also having resumed operations. In June, the company said it saw its weekly sales performance in owned doors “sequentially” improving — with nearly 40% recording positive net revenue growth for the final week of the month compared with the same period a year prior.
Despite these positive signs, Levi’s said it expects its operations will continue to be “significantly” adversely impacted for “at least the balance” of 2020. Additionally, it is preparing for the possibility of having to temporarily shutter some doors again in certain Coronavirus hot spots, particularly in states such as Texas and Florida.
Levi’s joins a growing list of major fashion players that have resorted to layoffs as they continue to grapple with the fallout from the coronavirus pandemic. Department store chains Macy’s and Nordstrom have both laid off thousands of workers, while sportswear giant Nike also made an unspecified number of cuts. Meanwhile, numerous companies have gone into bankruptcy since May — with Levi’s fellow denim-focused retailers True Religion, Lucky Brand and G-Star Raw among those to pull the trigger and file for Chapter 11 protection.