By Savyata Mishra
(Reuters) -Levi Strauss maintained on Monday its annual forecast for gross sales and revenue, excluding the influence of tariffs, and posted quarterly revenue forward of Wall Avenue targets, sending its shares up greater than 7% in after hours commerce.
Sweeping tariffs by President Donald Trump have sparked considerations over a world downturn and sharp value hikes for objects similar to clothes and footwear.
“Whereas we acknowledge that we’re working in an unsure atmosphere, our international footprint, sturdy margin construction, and agile provide chain place us to navigate the steadiness of the 12 months and past,” President and Chief Govt Michelle Gass stated in an announcement on Monday.
The corporate stated in January {that a} various provide chain throughout 25 international locations would enable it cross-source merchandise.
Levi imports solely about 1% of its merchandise instantly from China into the U.S., whereas that for Mexico was about 5%, its executives stated in January.
The retailer is taking a look at value will increase as one of many mitigating measures, stated Gass, including that value will increase might be “surgical.”
It has seen demand for wide-legged and thin denims maintain up – a development in keeping with rivals similar to Abercrombie & Fitch and Hole – regardless of buyers being selective in spending on discretionary objects.
In its quarterly submitting with regulators, the corporate added that it was analyzing the influence of tariffs and what it might do to attenuate influence.
“We anticipate these new tariffs to have a cloth influence on our outcomes of operations in fiscal 12 months 2025,” it added.
It additionally stated the atmosphere might have an effect on manufacturing and distribution.
“If these disruptions persist, they might require us to switch our present sourcing practices, which can influence our product prices, and, if not mitigated, might have a cloth antagonistic impact on our enterprise and outcomes of operations,” it warned.
“Provided that the state of affairs is fluid and unprecedented, the (tariff) impacts are unsure,” CFO Harmit Singh stated on a post-earnings name.
Rachel Wolff, an analyst at eMarketer, stated, “Levi Strauss’ unchanged forecast reveals the sheer impossibility of planning forward, as uncertainty surrounding Trump’s tariff strikes paralyzes manufacturers.”
As a part of its plan to streamline operations, Levi stated final October it was exploring a sale of Dockers, which has seen demand wrestle.
The corporate expects fiscal 2025 internet income to be down within the vary of 1% and a couple of% and adjusted earnings of $1.20 to $1.25 per share.
On an adjusted foundation, it earned a revenue of 38 cents per share within the quarter, in comparison with estimates of 28 cents.
(Reporting by Savyata Mishra in Bengaluru and Anuja Bharat Mistry; Enhancing by Alan Barona and Christopher Cushing)