COVID-19 has unsettled yet another global brand in Levi Strauss, as it announced cutting 700 jobs or 15% of its corporate staff. Plummeting sales caused by COVID-19 have forced major businesses like Levi’s to cut costs by laying off their workers. Levi’s has suffered a 62% drop in sales in the last quarter, which forced the company to reduce its workforce.
Companies like Levi’s are reeling from the pandemic. They also face uncertainties in the world market, as the coronavirus rapidly adjusts consumer demand.
While Levi’s said that consumers have been returning to their stores, they cannot be too hopeful because the pandemic has severely affected their operations. They expect a significant sales downturn at the end of the year. “There are still a lot of uncertainties,” Levi’s chief executive Chip Bergh told the BBC.
In the BBC report, Levi’s also reported a revenue decline of $498 million, a drastic fall from the $1.3 billion they collected in 2019. The company also reported losses of $364 million from January to May of this year. In the same period last year, Levi’s gained a profit of $29 million. During this slump, Levi’s bright spot is the reopening of 90% of its stores, which boosted its sales. Digital sales have also markedly improved.
This round of layoffs would save Levi’s around $100 million. The worldwide job reductions are also part of Levi’s countermeasures against the pandemic’s economic disruption. Layoffs “will vary by country and are subject to applicable consultation processes,” Bergh told the BBC. There were 15,800 employees at Levi’s at the end of November 2019. Of these, 8,500 worked in retail, and 1,800 were in manufacturing.
According to another BBC report, Levi’s had just seen an increase in global sales of jeans by 4.3% in 2017-2018. In 2018, the company had also built 74 stores, including “a 17,000 square foot store in New York’s Times Square,” as it rode the recent nostalgia for denim jeans, while the “athleisure” fad slipped. Celebrities and supermodels like Bela Hadid also helped revive their popularity. Levi’s had also relisted its shares on the New York Stock Exchange in 2019, after having left in 1985. At its relisting, the company was worth $6.5 billion.
The coronavirus pandemic and global quarantine lockdowns reversed this rising trend. Shoppers were not buying clothes anymore, because they weren’t allowed to leave the house anyway. Dramatic changes in consumer demand have left clothing brands like Levi’s struggling to make a profit. While the world awaits a COVID-19 vaccine or treatment, the economy remains unsure about the future.