Jeans maker Levi Strauss announced on July 7 that it will be cutting its non-retail, non-manufacturing workforce by 15 percent, or 700 office jobs worldwide. The move, which is projected to save US$100 million in annualized costs, comes after a mixed performance during the COVID-19 lockdowns in the second quarter of the year.
On the one hand, the company saw asteep decline in sales due to the closure of physical retail stores and wholesale outlets; on the other hand, its e-commerce business skyrocketed between March and May, to the extent that its financial results showed 80 percent growth in online sales during May alone. However, the online revenue was insufficient to offset the hit to physical sales, and overall Levi Strauss made a loss of US$364 million in that quarter.
In its announcement, the company said that moving forward, it expects business to be "significantly adversely impacted" for the rest of the year, and projects additional ongoing costs related to the pandemic—hence a series of pro-active cost-cutting measures which include the downsizing of its corporate workforce.
“The pandemic is accelerating retail landscape shifts and consumer behavior in ways that play to the strength of the Levi’s brand," said president and CEO Chip Bergh, describing the move as aiming to "enable us to become a leaner and more market-responsive organization, as well as give us greater confidence in our cost structure given the uncertainties around the impact of the virus."
The clothing industry has been particularly hard hit by COVID-19. Already prone to seasonal oversupply and extended payment terms even before the pandemic, the industry has seen a plunge in demand during the lockdown months—and skirts and pants in particular have fallen out of favour, with people working from home and only visible above the waist on video calls.