Levi Strauss & Co. is embarking on a global productivity initiative to be executed in phases over the next 12 to 18 months that's expected to generate annualized cost savings in the range of $175 million to $200 million.
The first phase of the program will deliver approximately $75-100 million in annualized savings before restructuring and related charges. Restructuring and related charges of approximately $65 million will primarily be recorded in the first quarter.
In this first phase, LS&Co. expects that it will eliminate approximately 800 positions, or nearly 20 percent of its non-retail and non-manufacturing employee population. The role eliminations reflect a reduction of management layers, an increase in spans of control, the removal of duplicative roles, a regrouping of country clusters and other structural changes.
Final plans will vary by country, and final estimates for headcount, timing and charges in certain areas of the business are subject to completion of applicable local works council and other consultative processes.
As the company continues to work through this initiative, it will redesign a number of key processes that should yield further savings and improve agility. Additional charges will be recorded in future periods. Key areas of focus include:
"Today's announcement reinforces our ongoing commitment to improving the structural economics of the business and further strengthening the financial health of the company," said Chip Bergh, LS&Co. president and CEO. "These changes will make us more competitive — both in our cost structure and in the marketplace — improving our agility and enabling us to focus on innovation, retail productivity, omnichannel capabilities and enhanced consumer experience in stores."
Streamlining the company's product development, planning and go-to-market strategies
Implementing efficiencies across the company's supply chain and distribution network
Adopting lower-cost service-delivery models
Continuing to pursue more disciplined procurement practices