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Levi Strauss says it wants to rely less on retailers in the low-price segment in the future

Photo: Sean Gallup/Getty Images

The jeans manufacturer Levi Strauss wants to cut many jobs after a slump in profits. Management's expectations for sales and profits in the new fiscal year fell short of Wall Street's expectations. According to this, up to 15 percent of the last 14,800 employees will leave, the company reported on Thursday evening after the US stock exchange closed in San Francisco. This is how Levi Strauss wants to reduce its costs.

In the last fiscal year, sales remained virtually at the same level as the previous year at $6.2 billion. However, net profit fell 57 percent to $250 million. Levi Strauss shares then fell by almost two percent in premarket US trading on Friday.

Cautious forecast for the new year

With a so-called productivity initiative, Levi Strauss wants to simplify operations and reduce costs. The restructuring with the job cuts will result in special costs of $110 to $120 million in the first quarter, it said. The austerity program is expected to last about two years and reduce costs by $100 million this year.

The future CEO Michelle Gass justified the cautious forecast for the new year with the uncertainty and fluctuations in the wholesale business. The manager will take over the leadership position on January 29th.

Sales of new products such as denim skirts and dresses increased by more than half in the fourth quarter. However, wholesale sales fell by two percent overall. Levi says it wants to rely less on retailers in the low-price segment in the future. Instead, the share of direct sales is expected to grow from just over 40 percent to 55 percent in the next five to six years.

For fiscal 2024, the company expects adjusted earnings per share of $1.15 to $1.25. Although this is more than in the previous year, it is less than analysts expected on average. Sales are expected to grow by one to three percent compared to the previous year. Here too, experts expected more. Levi generates the majority of its sales in North and South America.

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