(By Huo Dongyang, Edited by Zhang Guangkai)

The tariff policies of the Trump administration have raised concerns about a global economic recession and a sharp increase in clothing prices, becoming a Damocles' sword hanging over many apparel companies.

Levi Strauss & Co., the parent company of Levi's, which saw its stock price plummet by 19% due to tariff policies, became the first apparel company to release its earnings report after the implementation of these policies.

In the first fiscal quarter ending on March 2, 2025, Levi Strauss & Co. performed better than expected. During this period, the company's net revenue was $1.5 billion, an increase of 3% compared to the same period in 2024, with organic growth reaching 9%. By region, revenue from the Americas reached $783 million, up 6% year-over-year, with organic growth at 11%; revenue from the European market was $400 million, down 5% year-over-year, but increased by 3% on an organic basis; revenue from the Asia-Pacific region was $308 million, up 7% year-over-year, with organic growth at 10%.

Earnings Report

Among them, Direct-to-Consumer (DTC) business revenue recorded a 9% increase, with organic growth at 12%, accounting for 52% of total first-quarter revenue. DTC revenue grew double digits in both Asia and Europe, at 14% and 11%, respectively, while the U.S. also saw an 8% increase. Wholesale business decreased by 3% year-over-year, but showed organic growth of 5%.

During the subsequent earnings conference call, Levi Strauss & Co. stated that the company is comprehensively assessing the impact of tariffs, actively adjusting cost structures, optimizing supplier relationships, deepening customer collaboration, and implementing cautious pricing to ensure supply chain flexibility, particularly in addressing the uncertainties brought by tariff impacts.

Harmit Singh, the company's Chief Financial Officer, stated in an interview that "it is difficult to predict or plan for the impact of tariffs on consumers at this stage." Michelle Gass, CEO of Levi Strauss & Co., said the company is approaching the issue of tariffs with "a sense of urgency but without overreacting."

Gass noted that despite operating in an environment full of uncertainties, the company is confident in meeting the challenges of balanced development this year and beyond, thanks to its global influence, strong profit structure, and flexible supply strategy. The company has established a task force to analyze tariff issues while focusing on handling matters within its control, such as strengthening supplier relationships and optimizing product cost bases.

Some media outlets, when analyzing the impact of U.S. tariff policies on the apparel industry, suggested referencing the "nearshoring" approach of European luxury groups: covering labor cost differences through brand premiums. Levi Strauss & Co. emphasized its leadership position in the denim clothing sector, which may imply the company hopes to rely on brand loyalty to stabilize consumer purchasing intentions. Gass also revealed that if there are price adjustments, they will be executed very precisely, and no final decision has been made yet.

However, compared to most apparel companies, Levi Strauss & Co. is relatively less affected by tariffs. This is due to the diversification of its supply chain. In the first quarter of 2024, the company launched the "Global Productivity Plan (Project FUEL)" to optimize operational models and structures, reduce costs, and simplify processes. From the current situation, this plan seems to have provided some assistance to the company in responding to tariff policies.

According to foreign media reports, as of early 2025, the company's procurement comes from 28 countries, with 130 cooperative factories in China and partnerships with 50 factories in Vietnam. However, among the products sold in the United States, only about 5% are produced in Mexico, the proportion from Vietnam falls in the mid-single digits, and the percentage from China is just 1%.

Levi Strauss & Co. stated it will maintain its annual earnings guidance, expecting revenue (excluding exchange rate effects and divestitures) to grow between 3.5% and 4.5% in the 2025 fiscal year. However, this guidance does not take into account the recent impact of tariff policies. On April 9, Levi Strauss & Co.'s stock price surged by 20.12%, closing at $14.93 per share.

At midnight Beijing time on April 10, Trump announced a three-month comprehensive suspension of "reciprocal" tariffs, except for China. Trump also stated that after China announced countermeasures against U.S. tariffs, the U.S. would raise tariffs on China from 104% to 125%. The tariff storm continues to escalate.

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Original source: https://www.toutiao.com/article/7491615086222557759/

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