Premium Brand Vulnerability Exposed: Tariffs Overshadow Levi's Raised Forecast

Levi Strauss & Co. (LEVI) shares fell 7% in after-hours trading following the company's fiscal 2025 outlook, which fell below analyst expectations despite strong fourth-quarter revenue. The denim maker reported adjusted earnings per share of $0.50 for the quarter, missing forecasts of $0.52, while revenue rose to $1.8 billion, surpassing the $1.77 billion consensus and reflecting a 12% year-over-year increase Levi Strauss shares fall 7 as 2025 outlook disappoints^[1]. However, the company's 2025 adjusted EPS guidance of $1.20–$1.25, though raised from prior estimates, lagged behind the $1.37 analyst consensus Levi Strauss shares fall 7 as 2025 outlook disappoints^[1].

The downward pressure on shares stemmed from escalating U.S. import tariffs, which are squeezing Levi's profit margins. Executives disclosed that the company secured 70% of its holiday inventory early and implemented modest price hikes to mitigate costs, but these measures are insufficient to offset the 30% tariff on goods from China and 20% on imports from other countries . The CFO noted a projected 130-basis-point decline in fourth-quarter gross margins due to tariff-related expenses . Analysts highlighted that even Levi's premium brand positioning cannot fully insulate it from trade policy volatility. "Denim is no longer tariff-proof," remarked Michael Ashley Schulman of Running Point Capital Advisors, emphasizing the company's vulnerability to shifting geopolitical dynamics .

Levi's direct-to-consumer (DTC) channel remained a bright spot, with revenues rising 19% on a reported basis and 14% organically. E-commerce growth mirrored this trend, while wholesale sales increased 7% reported and 3% organic. The Americas accounted for 12% revenue growth, driven by 6% U.S. organic growth, with Europe and Asia also posting gains of 15% and 9% respectively on a reported basis Levi Strauss shares fall 7 as 2025 outlook disappoints^[1]. Despite these regional strengths, the company's gross margin expansion of 350 basis points to 61.3% in Q4 failed to reassure investors, as tariff pressures clouded long-term profitability Levi Strauss shares fall 7 as 2025 outlook disappoints^[1].

The stock's decline underscores investor skepticism about Levi's ability to navigate trade uncertainty. While the company's third-quarter results-7% revenue growth to $1.54 billion and adjusted EPS of $0.34-exceeded expectations, driven by strong demand for wide-leg denim, the 2025 outlook remains constrained by tariffs. CEO Michelle Gass attributed the Q4 performance to a "sharpened focus on the core Levi's brand," but the raised forecast still fell short of Wall Street's optimism Levi Strauss shares fall 7 as 2025 outlook disappoints^[1].