Levi’s, Macy’s Sales Results Reflect Ongoing COVID-19 Challenges
Levi Strauss & Co. and Macy’s Inc. recently released results from the past financial quarter, which was dominated by store closures due to the pandemic.
On July 7, denim giant Levi’s announced a net loss for the quarter of $364 million, which included restructuring charges, inventory costs and other charges related to the COVID-19 economic freeze. Its net revenues declined 62 percent to $498 million compared to $1.3 billion in the same quarter the previous year.
Because of the economic freeze, the denim giant would lay off 700 people, or about 15 percent of nonretail and nonmanufacturing workforces, said Chip Bergh, president and chief executive officer. But, according to Bergh, an annualized savings of $100 million is expected from the downsizing move.
“We started the year with strong momentum, but the global pandemic and economic crises had a significant 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,” Bergh said. “I’m proud of how the team stepped up, accelerating our activation of key e-commerce and omni-channel capabilities, proactively cutting costs, and managing cash smartly—and finding innovative ways to connect the Levi’s brand with its fans.”
Like many colleagues, Macy’s has been dealing with store closures caused by the COVID-19 pandemic. Macy’s closed all of its 775 stores in March and started reopening them in late May. All except six locations are back in business, albeit operating at reduced hours, Jeff Gennette, chairman and chief executive officer, said.
As part of a restructuring plan to deal with the COVID-19 economic slowdown, Macy’s announced that it would eliminate 3,900 jobs in its corporate and management sectors. These expected job cuts and its restructuring would contribute to savings of $365 million this year.
The jobs-cuts announcement on June 25 was a harbinger of the July 1 announcement of results for the first fiscal quarter of the year, which ended May 2. Net sales were $3.017 billion, down more than 45 percent compared to $5.5 billion in the first fiscal quarter of 2019. The company reported an earnings per share loss of $11.53. Macy’s withdrew its 2020 sales and earnings guidance and declined to provide an updated outlook.
During a July 1 call with analysts, Gennette said that Macy’s Inc.’s digital business showed resilience. “The digital half of our business has shown very strong performances, and we expect this to continue at a healthy double-digit growth rate through the back half of the year,” he said.
This type of retail downturn is not unique as every retailer deemed nonessential was forced to close during the first quarter of this year. The toll taken by the pandemic was exhibited in the NRF’s “2020 Top 100 Retailers List,” which was also released on July 1. Some 16 of the retailers are apparel focused, though the announcement also noted that two of the retailers, Neiman Marcus and J.C. Penney Company, Inc., announced bankruptcy this year.