Levi Strauss warns of weak second half on pandemic woes, to cut 700 jobs

Levi Strauss warns of weak second half on pandemic woes, to cut 700 jobs

FILE PHOTO: The Levi's tag is seen on pants hanging in a Levi Strauss store in New York
FILE PHOTO: The Levi's tag is seen on pants hanging in a Levi Strauss store in New York City, U.S., March 19, 2019. REUTERS/Brendan McDermid

REUTERS: Levi Strauss on Tuesday (Jul 7) cautioned its business would be hit in the second half of the year, even as the denim apparel maker's sales have been improving at its reopened stores, following government-mandated COVID-19 lockdowns.

The company also said it would cut about 700 positions, or roughly 15 per cent of its workforce, in non-retail, non-manufacturing segments that would help it save US$100 million annually.

Met with temporary closure of its own stores as well as partner outlets, Levi introduced curbside pickup and started fulfilling online orders at its stores as customers turned to online shopping to avoid contact with people.

The company reported a 25 per cent increase in its online business in the second quarter ended May 24, with a month-over-month rise of nearly 80 per cent in May.

Levi added that weekly sales performance in company-operated stores was improving sequentially, as productivity in the final week of June reached 80per cent compared to a year earlier.

Still, Chief Executive Officer Chip Bergh said that he was "cautiously optimistic" about the early trends.

The company also expects its margins for the rest of the year to be under pressure as it tries to offload excess inventory that remained unsold during the lockdowns.

Shares of the San Francisco-based company, which have lost about a quarter of their value since the start of the year, fell 4per cent in extended trading.

Net revenue in the second quarter fell 62 per cent to US$497.5 million, but beat analysts' expectations of US$485.5 million, according to IBES data from Refinitiv.

Levi reported net loss attributable to the company of US$363.5 million compared with a profit of US$28.2 million, a year earlier, largely due to US$242 million in restructuring charges and inventory costs.

On an adjusted basis, the company posted a loss of 48 cents per share, narrower than expectations.

Source: Reuters

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