Like pretty much every other retail brand worldwide, Levi’s Inc. faced challenges in the years following the worst of the Covid pandemic. But recently, things seemed to be going pretty well for the iconic company.
During the company’s first-quarter earnings call in April, CEO Michelle Gass said earnings were up by 8% year over year, although she warned that uncertainty around tariffs could shake things up.
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During the height of the pandemic, like many retailers, Levi’s was able to build and staff logistics networks that allowed them to meet consumers’ e-commerce demands.
Distribution centers popped up across the U.S., fueled by assumptions that e-commerce growth would continue at a breakneck pace.
But a few years later, consumers are increasingly cautious about discretionary spending, and the logistics boom seems to be starting to unwind.
Retailers from Nike to Gap Inc. have pulled back on owning and operating their own fulfillment infrastructure, opting instead to outsource logistics to reduce capital expenditures, improve agility, and limit exposure to unpredictable consumer demand.
Now, Levi’s is part of the trend.
Levi Strauss & Company will close a logistics center in Kentucky.
Image source: Shutterstock
Levi’s will close a major distribution center
On June 16, Levi Strauss & Co. filed a Worker Adjustment and Retraining Act (WARN) notice with Kentucky officials, with layoffs to begin August 18. Labor attorneys are now investigating whether Levi’s provided employees with adequate advance notice under federal law, raising the possibility of legal exposure.
Levi’s decision to close its distribution center in Hebron, Kentucky, is the latest sign that the retail industry is trying to figure out how to meet customer demands.
The closure will result in 364 job losses. Levi’s announced the closure in June, citing a strategic shift toward a “hybrid” distribution model that relies more heavily on third-party logistics (3PL) partners.
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The facility has only been open for three years. It was designed to support growing e-commerce demand on the East Coast and was emblematic of Levi’s pandemic-era logistics expansion. The closure reveals how quickly assumptions about consumer behavior and fulfillment strategy are being rethought.
The company is changing its distribution strategy and will now rely on a mix of owned and third-party centers rather than strictly owned logistics operations, according to Supply Chain Dive.
For Levi’s, shedding fixed assets is part of a broader strategy to streamline operations and focus on high-growth, high-margin areas like direct-to-consumer sales.
But the move also underscores the human and legal complexities of rapid transformation.
Unionized workers at the Hebron facility reportedly have rights that may allow them to transfer into other roles within the company. Non-union workers, however, may not have the same protections.
Levi’s latest cutback
The Kentucky layoffs follow broader cutbacks at Levi’s. Earlier this year, the company cut 10-15% of its corporate workforce, divested from its Dockers brand, and reaffirmed a strategic focus on premium positioning and DTC growth.
Gass, who took the helm in 2024, has signaled a clear shift from volume to margin. Her approach is increasingly common for legacy apparel brands as they battle possible tariffs, inflation, rising labor costs, and tightening consumer spending.
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The rapid rise and fall of the Hebron distribution center also reflects a broader misalignment between long-term infrastructure bets and short-term demand realities. Like many retailers, Levi’s built for a future of sustained e-commerce acceleration, only to be confronted with a post-pandemic plateau.
Levi’s isn’t alone. Since 2023, Amazon has closed or delayed dozens of fulfillment centers. FedEx and UPS have restructured their networks. Even Walmart has slowed its fulfillment center expansion as part of a more cautious approach to logistics investment.
The pandemic may have reshaped consumer expectations, but it has also forced retailers to rethink what operational resilience and adaptability look like. For Levi’s, the transition to a hybrid model is designed to enable faster pivots and reduce overhead.
Gass is expected to address the layoffs at Levi’s Q2 earnings call later this week (July 10, 2025).