MW Levi's sticks with forecast, but it doesn't include tariff impact on earnings

By Bill Peters

CEO notes 'uncertain environment' but touts an 'agile supply chain'

Levi Strauss & Co. on Monday reported a higher adjusted quarterly profit than Wall Street expected, and the denim and jeans maker said it was sticking with its full-year outlook - one that doesn't include the potential impact from President Donald Trump's tariffs.

The company said it still expects a sales drop of 1% to 2% for its fiscal year, which is set to run through November, with adjusted earnings of $1.20 to $1.25 a share. That forecast, Levi's $(LEVI)$ said, excluded any hit from "the recent tariff announcements." But it said it expected "minimal impact" to its margin expectations for the second quarter.

Levi's reported fiscal first-quarter sales of $1.53 billion, up 3% year over year. It reported adjusted earnings per share of 38 cents.

Analysts polled by FactSet expected Levi Strauss to report adjusted earnings of 28 cents a share for its first quarter, which ended on March 2. They expected sales of $1.54 billion.

"While we recognize that we are operating in an uncertain environment, our global footprint, strong margin structure and agile supply chain position us to navigate the balance of the year and beyond," Chief Executive Michelle Gass said in a statement.

Shares rose 3.1% after hours.

The financials included in Levi's earnings release excluded $67 million in sales related to Dockers, which the company now considers "discontinued operations."

The company has been trying to sell its Dockers business, amid efforts to lower costs and focus more on newer jeans and other denim items. Levi's has tried to retain inflation-fatigued consumers' interest with a partnership with Beyoncé.

Levi's reported the results as new tariffs announced last week by Trump continue to roil markets. Meanwhile, jeans could be targeted for steeper trade retaliation by the European Union.

Morningstar analyst David Swartz, in a note last week, said Trump's tariffs had "significant implications" for clothing makers. He noted that nearly all the clothing sold in the U.S. is imported, mainly from Asia.

Levi's, in its most recent annual report, said that in its last fiscal year, it got its products from manufacturers in nearly 30 nations. No more than 30% came from any one country, that report said. The company said it sourced products from North and South Asia, the Americas, including the United States, as well as Europe and Africa. And it said that of the items it sells in the U.S., "less than 1% are directly sourced and manufactured in China."

Even before Trump's announcement, Levi's had forecast falling sales for its fiscal year. In January, management said "there continues to be a lot of uncertainty related to the macro environment, potential tariffs, changes in the tax code, as well as worsening foreign exchange."

The stock is down some 34% over the past 12 months.

-Bill Peters

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April 07, 2025 16:44 ET (20:44 GMT)

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