Levi Strauss & Co. (LS&Co.) announced a global productivity initiative, which will be executed in phases over the next 12 to 18 months. This initiative, when completed, is expected to generate annualized cost savings in the range of $175-200 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:
-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