LEVI’S PLANS TO AX 1,000 JOBS
Byline: Robert Lohrer
LAS VEGAS — In a dramatic move to control overhead, Levi Strauss & Co. will eliminate approximately 1,000 of the 5,000 salaried positions in its U.S. work force during the next eight months, company executives said Wednesday.
Levi’s San Francisco corporate office will feel the brunt of the cuts. About 500 positions of the 2,000 home-office jobs will be eliminated. The other 500 will come from other U.S. offices.
The downsizing is an attempt to control overhead costs and is expected to save the privately held company, which has a total U.S. work force of 26,000, about $80 million per year. Levi’s had annual sales of $6.7 billion in 1995 and expects to announce a 10th consecutive year of record total revenues later this month.
“When you perform well, you sometimes relax the standards that have gotten you there,” said Gordon Shank, president of Levi Strauss, the Americas, contacted at the MAGIC International trade show here. “Overhead was exceeding revenue growth,” he said.
Increasing competition in the jeans field in the last 18 months further sparked the need to cut costs, added a corporate spokesman for the San Francisco-based company, the largest apparel maker in the world. Levi’s overhead costs have been running higher than a lot of the competition, he said.
“The market has changed pretty dramatically over the last year or so,” the spokesman said. “We’ve got a lot of designer brands and private label brands nipping at our heels, and we’ve got to tighten our belts a little.”
Intensifying the push-and-pull in the jeans field have been the Tommy by Tommy Hilfiger and Polo by Ralph Lauren lines, both introduced for retailing this past fall, while the CK Calvin Klein jeanswear line produced by Designer Holdings has seen phenomenal growth. On top of this, the fabric market has been filled with talk of denim backups, reflecting overexpectations for denim apparel sales in recent months.
As for the Levi’s layoffs, attrition likely will account for very few of the cuts, Shank said. He did not hide from the fact that, very soon, nearly 1,000 employees will be looking for other work. “This is not fun,” he said.
Levi Strauss has four major brands: Levi’s, Slates, Dockers and Brittania. As noted, the Brittania label has been up for sale since last month. Shank said the decision to eliminate 1,000 jobs was not related to the sale of Brittania.
“This is not driven by a business demise,” Shank said. “I don’t want to say expenses got out of control, but we had to address overhead.”
The layoffs constitute about 3.8 percent of Levi’s U.S. work force. The layoffs, Shank said, are most likely to affect workers on the Levi’s brand rather than the newer Slates label for men’s dress slacks.
“Slates is an emerging organization and an emerging business,” Shank said. “This is going to affect our mature business.”