Levi Strauss & Co Faces Margin Challenges Amid Trade Policy Shifts

Levi Strauss & Co saw a decline of about 9% in its shares on Friday as investors turned their attention to potential tariff-related impacts on the company's fourth-quarter margins. Despite presenting a positive annual profit outlook, the denim manufacturer warned of a 130-basis-point dip in margins due to trade policy challenges.

The projection notably underscores how evolving trade policies under the Trump administration are impacting consumer-focused companies, particularly those without established trade agreements with the US. Levi's expanded its sales and profit forecasts for 2025, driven by a resurgence in baggy apparel popularity among Gen Z, yet tariffs remain a concern.

Although Levi's has proactively secured 70% of its holiday inventory and slightly increased pricing to counteract tariffs, Wall Street analysts such as those from Barclays called the margin outlook conservative. This comes as other retailers, including Ralph Lauren and Abercrombie & Fitch, face similar pressures. However, consumers with higher disposable income can absorb these increased costs more easily.