Levi’s Q2 sales fall 62%; cutting 15% of corporate workforce
Levi Strauss & Co. swung to a second-quarter loss as its stores and most wholesale doors were closed for most of the period due to the COVID-19 pandemic.
The denim maker also said it will cut about 700 positions, or roughly 15% of its global corporate workforce, for annualized savings of $100 million.
Levi’s reported a net loss of $364 million, or $0.91 a share, for the quarter ended May 24, compared with net income of $29 million, or earnings of $0.7 in the year-ago period. Excluding one-time charges, Levi’s lost $0.48 a share.
Revenue fell 62% to $498 million. Levi’s said the loss was partially offset by its e-commerce business which grew 25% for the quarter, with sequential month-over-month acceleration to nearly 80% growth for the month of May. The retailer noted that as its stores have reopened, e-commerce net revenues growth has remained strong, at nearly 70% growth for June as compared to the same month last year.
“We started the year with strong momentum, but the global pandemic and economic crises had a significantly negative impact on our second quarter results, as our stores and most wholesale doors were closed around the world for the majority of the quarter,” said Chip Bergh, president and CEO of Levi Strauss & Co.
Currently, roughly 90% of Levi’s company-operated doors and franchisee doors have reopened globally, as well as the majority of third-party retail locations.
While traffic and sales remain down to prior year, weekly sales performance in company-operated doors is sequentially improving, as store sales productivity in the final week of June as compared to prior year approached 80%, with nearly 40% of open company-operated stores delivering positive net revenues growth compared to the same week in the prior year, the company stated.
With COVID-19 on the rise in certain hot spots, Bergh told CNBC that Levi’s has about 40 U.S. locations that it is currently monitoring closely, checking them every Monday, Wednesday and Friday. The company has plans in place in case it needs to temporarily reclose stores.
Levi’s ended the quarter with total liquidity of roughly $2 billion, with $448 million still available under the company’s revolving credit facility.