Levi Strauss shares fall 9% as tariff-related prices overshadow forecast increase

Levi Strauss & Co shares fell about 9% on Friday as buyers centered on the denim maker’s warning of a tariff-related hit to its fourth-quarter margin, overlooking the next annual revenue forecast.

The margin-hit forecast highlights the affect of the Trump administration’s altering commerce insurance policies on consumer-facing corporations, particularly these with suppliers in international locations that wouldn’t have commerce offers with Washington in place but.

Levi’s has capitalized on the resurgence of dishevelled, loose-fit attire amongst Gen Z clients and raised its 2025 gross sales and revenue forecasts on Thursday, however the firm nonetheless warned of a 130-basis-point hit to its fourth-quarter gross margins.

“Whereas administration calls this (rising bills) transitory, the priority is that Levi’s has struggled to indicate a capability to scale bills for 3-5 years now, thus creating decrease ranges of visibility into 2026 margin,” Ike Boruchow, fairness analyst at Wells Fargo, mentioned.

The corporate sources the majority of its merchandise from South Asia, together with Bangladesh, Cambodia and Pakistan – international locations that face excessive tariffs at the moment.

Wall Avenue analysts referred to as the forecast “conservative,” with Barclays analysts saying that the lackluster forecast got here in regardless of the corporate not seeing any hostile modifications in purchasing traits in September. Trump’s commerce insurance policies have additionally pressured the margins of different retailers comparable to Ralph Lauren, Abercrombie & Fitch and Coach purse proprietor Tapestry. Nonetheless, corporations that cater to extra prosperous clients face much less burden as they will move on the upper prices to the patron. Levi’s has secured about 70% of its vacation stock early and barely raised costs to mitigate tariff affect and put together for the vacation quarter, executives mentioned in a post-earnings name.

It has additionally broadened its product choices, leaned into full-price gross sales and saved a decent leash on stock to offset weaker shopper sentiment and tariff-related pressures.

This has helped the corporate’s inventory to climb about 40% up to now this yr. Its ahead price-to-earnings a number of, a standard benchmark for valuing corporations, is 16.94, in contrast with Ralph Lauren’s 20.59, Abercrombie’s 7.48 and American Eagle Outfitters’ 11.38.