**San Francisco**: Levi Strauss & Co. discusses its adaptive approach to the economic impact of President Trump’s tariffs on imports, highlighting the importance of a robust supply chain and vendor relationships. The brand is optimistic about growth despite potential challenges with a commitment to its heritage and evolving consumer demands.
Levi Strauss & Co. is poised to tackle the economic implications of President Donald Trump’s recently instituted “Liberation Day” tariffs, which affect a number of import-export dynamics, particularly with regard to the apparel industry. During the company’s earnings call for the first quarter of 2025 on Monday, Michelle Gass, the president and chief executive officer of Levi Strauss, highlighted the importance of an adaptable global supply chain coupled with robust vendor relationships as essential elements of the company’s strategy moving forward.
Based in San Francisco, LS&Co. sources its materials from 28 different countries, with 20 of those being actively involved in exporting goods to the United States. Among the countries impacted by the new tariffs, which range from 10 to 49 percent and were announced on April 2, are Bangladesh, Cambodia, Egypt, Pakistan, Sri Lanka, and Vietnam. Gass emphasized that the company’s ability to pivot amidst these evolving conditions will be crucial in addressing both immediate and longer-term challenges.
Harmit J. Singh, executive vice president and chief financial and growth officer at LS&Co., described the business environment as “fluid,” indicating that the company is engaged in proactive scenario planning to pinpoint various mitigation strategies. “We recognize this is a quickly evolving macro situation and we have to see where the dust settles to give you the guidance that is going to be as helpful to you as possible,” Singh stated.
Currently, LS&Co. maintains an unchanged forecast for the entire year, asserting that the tariff situation is not projected to have any immediate financial impact. Notably, Gass reiterated the significance of the international market, noting that nearly 60 percent of the company’s revenue is generated outside the United States, which could serve as an essential buffer in the event of a domestic economic downturn.
Looking ahead to the second quarter, Singh stated that the outlook remains stable, with minimal anticipated effects from the tariffs at this time. He added that due to seasonal factors, the second quarter is typically the company’s lowest for revenue and margins.
As LS&Co. navigates these challenging conditions, Gass highlighted the brand’s long-standing heritage, which spans over 170 years. “As an iconic brand, we’ve weathered challenging times before. We have a playbook that begins with leveraging the strength of our brand and our deep connection with consumers,” she explained, noting that during turbulent periods, consumers often gravitate towards familiar and trusted brands that offer value and quality.
In terms of growth, Levi’s brand saw an increase of 8 percent in sales during the quarter, with U.S. sales also up by 8 percent and international sales growing by 9 percent, driven by markets in Mexico, the UK, France, and Germany. The quarter’s growth was largely attributed to unit sales, with a notable contribution coming from an increase in average unit retail (AUR).
Levi’s direct-to-consumer (DTC) strategy continues to show promising results, with DTC sales increasing by 12 percent in the first quarter. DTC now constitutes 52 percent of total global net revenues, attributing this success to new store openings in regions such as Italy, Mexico, and India, as well as a strong online presence. Gass remarked that AURs in the DTC channel are rising as consumers show increased interest in premium products and the company has consciously reduced promotions within its retail outlets.
The brand is also focusing on improving the online consumer experience by enhancing the quality of content on its website and incorporating more dynamic visuals. Gass mentioned that customer satisfaction scores for the U.S. e-commerce business have reached an all-time high, reflecting a positive consumer response to these upgrades.
In the wholesale category, Levi’s also posted a growth of 5 percent, with U.S. wholesale sales exceeding expectations. The women’s category has seen remarkable acceleration, growing double digits over the past two quarters and now representing 38 percent of net revenues. Levi’s diversification into lifestyle products beyond denim has proven fruitful, with categories such as dresses and outerwear experiencing significant growth.
In response to evolving fashion trends, Gass noted that the loose and baggy fits are driving a substantial growth segment, while classic styles like slim and skinny jeans continue to sustain a steady demand among consumers.
Overall, Levi Strauss & Co. projects a commitment to adapting in the face of changing market conditions while capitalising on new growth opportunities across its various product lines. The company’s approach in navigating potential challenges from external factors, such as tariffs, illustrates its intent to sustain resilience in a competitive landscape.
Source: Noah Wire Services
