Kristina Roberts
Levi Strauss, the world-famous denim brand known for its classic jeans, is facing a challenging time in the global market. On Friday, the company’s shares dropped by 7.7% in premarket trading. This fall came after Levi’s yearly profit forecast did not meet what investors were expecting. Even though the brand’s wide-leg and loose-fit jeans have become a big hit among Gen Z customers, the company’s profits are being affected by rising tariff-related costs.
Levi Strauss had recently announced that its sales and profits for 2025 would be higher than before. This was a result of the strong comeback of baggy jeans, a fashion trend that has become especially popular among younger people across Europe and the Americas. However, this positive news could not completely hide the problems caused by trade tariffs. The company warned that these tariffs would hurt its fourth-quarter profit margins by about 130 basis points. This means that a part of its earnings will be lost because of extra import costs.
The main reason behind this issue lies in U.S. President Donald Trump’s new trade policies. These shifting tariff rules have created uncertainty for many companies, especially those that depend on goods from foreign countries. Levi Strauss, for instance, gets most of its products from South Asian nations like Bangladesh, Cambodia, and Pakistan. Unfortunately, these countries have been hit with higher tariffs under the new U.S. trade rules. These added costs have made it more expensive for Levi to import its jeans and other clothing items into the U.S. market.
According to experts at Barclays, Levi Strauss’s guidance for the fourth quarter appears “conservative.” This means they think the company is being cautious about its future predictions. The analysts explained that Levi has not noticed any major changes in customer buying trends during September, nor has there been any resistance to the company’s slight price increases. Both consumers and retailers have continued to support the brand, which shows that demand remains strong even as production costs rise.
Levi Strauss is not the only brand feeling the pressure of the changing tariff policies. Other famous clothing companies, such as Ralph Lauren, Abercrombie & Fitch, and Coach’s parent company, Tapestry, are also facing similar challenges. The tariffs have made it difficult for many fashion brands to keep their profit margins steady because they now have to pay more to bring goods into the United States.
To deal with these problems, Levi Strauss has tried to plan ahead. Company executives shared that they managed to secure nearly 70% of their holiday season inventory earlier than usual. This move was meant to protect the company from any unexpected trade issues or supply chain problems during the busy shopping months. Levi also raised its product prices slightly to balance out some of the extra costs caused by the tariffs. These actions were part of the company’s strategy to stay prepared for the upcoming holiday quarter, which is one of the most important times of the year for retail sales.
Despite these efforts, the company’s earnings prediction still did not fully satisfy investors. Levi Strauss said it expects its adjusted earnings per share for the year to be between $1.27 and $1.32. This range is a little higher than its earlier forecast of $1.25 to $1.30. However, according to data from LSEG, the midpoint of this new forecast—$1.295—is slightly below what analysts had estimated, which was $1.31. While the difference might seem small, even a few cents lower in earnings can lead to disappointment among investors who closely track financial results.
The company’s forecast also assumes that the United States will keep its tariffs steady at 30% for China and 20% for other countries until the end of the year. If these tariffs remain unchanged, it will continue to increase the company’s expenses. For a brand that depends heavily on global manufacturing, these trade policies have a direct impact on profits. It becomes a tough situation where Levi has to either absorb the higher costs or increase prices for customers, both of which have risks.
Even with these difficulties, Levi Strauss remains one of the stronger players in the fashion market. According to LSEG data, Levi’s forward price-to-earnings multiple is 16.94. This number shows how the company’s stock value compares to its expected future profits. Levi’s figure is much higher than its competitors—Abercrombie’s stands at 7.48 and American Eagle Outfitters’ at 11.38. This higher value means investors still see Levi Strauss as a company with good long-term potential, despite the current challenges.
Levi Strauss has been a household name for decades, known for its durable jeans that symbolize casual style and comfort. The brand has survived many ups and downs in fashion, from the skinny jeans era to the current rise of loose-fit designs. Its ability to adapt to changing styles has helped it stay relevant among new generations of shoppers. Recently, the growing popularity of wide-leg jeans, especially among Gen Z customers, has brought fresh energy to the company’s sales. Young people are drawn to the relaxed and retro look, which fits well with current trends that value comfort and self-expression.
However, being successful in fashion today requires more than just popular styles. Companies must also manage global supply chains, changing trade rules, and unpredictable government policies. Tariffs, which are taxes on imported goods, can have a big effect on how much a company earns. When these tariffs go up, brands like Levi Strauss face the difficult choice of either raising prices or accepting smaller profits. Both options have consequences—higher prices can push away buyers, while lower profits can upset investors.
For Levi Strauss, this moment is a test of balance. It must keep customers happy with trendy, affordable products while also keeping investors confident about its financial strength. The company’s careful preparation for the holiday season, early inventory planning, and price adjustments show that it is not giving up easily. These steps may help soften the blow from tariff costs and maintain stable sales in the coming months.
Even though its short-term outlook looks slightly weaker due to the tariffs, Levi Strauss’s strong global brand and loyal customer base give it a solid foundation for recovery. Investors may have reacted quickly to the lower-than-expected forecast, but many still believe in the company’s long-term growth. After all, fashion trends may change, but Levi’s ability to reinvent its classic jeans for every new generation remains one of its greatest strengths.
