Due to weak sales performance, Levi's, a denim brand based in San Francisco, announced that it will cut 10% to 15% of its global workforce in the first half of 2024, hoping to cut costs and streamline operations.
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Levi's announced global layoffs
A few days ago, according to Levi's, due to weak sales worldwide, the layoffs are also part of a two-year restructuring plan for the company to control costs. Levi's currently employs around 20,000 people worldwide, and the restructuring plan is expected to save $100 million in fiscal 2024 costs. As a well-known denim brand, Levi's was founded in 1853. In 1971, Levi's first landed in the capital market. In 1985, the company was delisted after a privatization. In 2019, Levi's was listed on the New York Stock Exchange.
Levi's fourth-quarter fiscal 2023 earnings report showed that the company's net revenue for the quarter was $1.64 billion, a year-on-year increase of 3%, below analysts' expectations of $1.66 billion. Levi's blamed the lower-than-expected results on plans to exit the Denizen brand, reduced discounted sales, weaker foreign currency exchange rates and the eventual liquidation of the Russian business. The company expects its net income to grow by 1% to 3% in fiscal 2024, compared to the consensus of 4.7%. Levi's expects adjusted earnings per share of $1.15 to $1.25, below analysts' expectations of $1.33.
Michelle Gass, the incoming CEO of Levi's, said the company's wholesale business in the U.S. improved last quarter and expects growth in the second half of 2024. However, Levi's will continue to be cautious due to the uncertainty of consumer demand.
European and American giants have announced layoffs one after another
Currently, the wave of layoffs is spreading across the globe. Recently, a number of giants, including Lloyds Bank, the largest bank in the United Kingdom, European software giant SAP, German auto parts giant Bosch, American department store chain Macy's, American e-commerce giant eBay, Citibank, Microsoft, etc., announced layoffs. Layoffs.fyi, a layoff statistics website, shows that 76 tech companies laid off more than 21,000 employees in January. According to a report released earlier this month by Challenger, Grey and Christmas, the tech industry laid off 168,000 jobs in 2023, the highest number of layoffs of any industry, including Microsoft's 10,000 layoffs. According to CNBC analysis, consumer spending and technology company income continue to be constrained by factors such as inflationary pressures and high interest rates.
According to the British "Guardian" on January 27, John Lewis Partners, the parent company of the British high-end department store chain John Louis, is considering laying off 11,000 employees in the next five years. At least 10 percent of the group's headquarters, supermarkets and department stores could be affected, according to people familiar with the matter.
According to CNBC, on January 25, local time, Microsoft announced in an internal memo that the company would lay off 1,900 people in the game department, accounting for about 9% of the department's 22,000 employees. Microsoft called the layoffs a "painful decision." As for the specific reasons for the layoffs, Microsoft said that entering 2024, the leadership of Microsoft Games and Activision Blizzard is committed to aligning strategy and execution plans with a sustainable cost structure. Together, the two sides set priorities and identified areas of overlap.
It's worth noting that Microsoft announced plans to lay off 10,000 employees a year ago to push it to focus on key strategic directions such as artificial intelligence. Previously, Microsoft laid off a total of 11,000 employees in fiscal year 2023 (ending June 30, 2023), when the number of employees worldwide was 221,000, a significant decrease from the 232,000 announced in December 2022. On January 25, local time, Microsoft's U.S. stock closed at $404.87 per share, up 0.57%, with a market value of $3 trillion. This is the first time that Microsoft has reached a market value of $3 trillion, and Microsoft is also the second company to reach a market value of $3 trillion after Apple.
On January 25, Lloyds Bank Group announced that as more customers choose online banking services, the bank plans to optimize its branch structure and lay off about 1,600 employees, while creating 830 jobs. According to Lloyds Bank, the total number of net layoffs due to the restructuring was 769.
On January 23, eBay, the U.S. e-commerce giant, announced that it would lay off about 1,000 full-time employees due to a poor operating environment and sluggish business growth. It is worth noting that these 1,000 people are equivalent to the total number of full-time employees of eBay. In a letter to employees on the same day, the company's chief executive, Ianoni, said that the layoffs were necessary because the company is currently facing a challenging macroeconomic environment, and the company has already increased the number of employees and expenses faster than the growth rate of the business, and the company plans to further reduce the number of non-regular employees in the coming months. It is reported that this is the second round of layoffs in 12 months. In February 2023, eBay announced that it would lay off about 500 employees worldwide.
On January 23, European software giant SAP announced a major restructuring plan, including the reduction of about 8,000 employees. At the end of 2023, SAP had around 108,000 full-time employees, and this restructuring means that more than 7% of its workforce will be affected.
On January 19, Bosch Group, the world's largest auto parts supplier, announced that it will lay off 1,200 employees by 2026, of which 950 will be cut in Germany. Bosch said that the main reasons for the layoffs were the sharp rise in the cost of energy and raw materials, while the recession and high inflation rate forced companies to cut costs.
On January 18, Macy's, the U.S. department store chain, said it would start laying off 2,350 employees and closing five stores on January 26 to streamline operating costs. It is reported that the layoffs account for 3.5% of the total number of employees at Macy's.
On January 12, Citibank announced that it would lay off 20,000 employees, or about 10% of its workforce, over the next two years, and expected to save $2.5 billion. According to the financial report, Citibank's fourth fiscal quarter of 2023 turned from a profit to a loss, and the CEO bluntly said that the quarterly results "looked bad" and "extremely disappointing", and the bank's revenue fell 3% year-on-year to $17.44 billion, lower than the $18.74 billion expected by analysts.
China Business Daily is synthesized from Securities Times, CCTV Finance and Economics, and Daily Economic News
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