<br><br>**Levi Strauss' Profit Forecast Falls Short How Tariffs Are Impacting the Denim Giant's Bottom Line**<br><br>Despite a full-year profit forecast increase, Levi Strauss & Co. shares took a hit, dropping 7.5% in extended trading, as the company's efforts to mitigate the impact of US import tariffs fell short. In this blog post, we'll delve into how Levi Strauss' forecasts annual profit below estimates, explore the company's strategies for coping with tariff-induced costs, and examine what this means for the future of the denim industry.<br><br>**The Impact of Tariffs**<br><br>As the Trump administration's shifting tariff policies continue to create uncertainty, companies like Levi Strauss are forced to adapt. To protect its holiday quarter, the company has secured about 70% of its holiday inventory ahead of schedule and raised prices modestly. While these steps will help cushion the blow, they won't fully offset the pressure. The company expects a 130-basis-point hit on its fourth-quarter gross margin due to tariffs.<br><br>**Forecasting Below Estimates**<br><br>Levi Strauss now expects fiscal-year 2025 adjusted profit per share in the range of $1.27 to $1.32, up from its prior forecast of between $1.25 and $1.30 per share. The midpoint of this range is below an estimate of $1.31, according to data compiled by LSEG.<br><br>This forecast assumes US tariffs will remain at 30% for China and 20% for other countries through the year-end. As Michael Ashley Schulman, CIO at Running Point Capital Advisors, noted, Three months ago, investors could squint and imagine denim as tariff-proof, but now it's clear that even jeans can't button up against trade uncertainty...<br><br>**Coping Strategies**<br><br>To mitigate the impact of tariffs, Levi Strauss has focused on full-price sales through its direct-to-consumer channel. The company has also broadened its product offerings and kept a tight leash on SKUs (an industry term for inventory).<br><br>Its merchandise levels jumped 12% in the reported quarter, compared to last year. However, the company sources the bulk of its products from South Asia, including Bangladesh, Cambodia, and Pakistan, which face high tariffs under the Trump administration.<br><br>**Strong Demand**<br><br>Despite the challenges posed by tariffs, Levi Strauss topped Wall Street estimates for third-quarter sales and profit. The company reported a 7% rise in net revenue for the quarter ended August 31 to $1.54 billion, beating analysts' estimate of $1.50 billion, according to data compiled by LSEG.<br><br>Adjusted profit came in at 34 cents per share, compared to an estimate of 31 cents per share. This strong demand for wide-leg denim bottoms in Europe and the Americas helped offset some of the tariff-induced costs.<br><br>**Conclusion**<br><br>As Levi Strauss navigates the challenges posed by tariffs, it's clear that even iconic brands are not immune to the pressures of trade uncertainty. However, with its strategies for coping with tariffs and strong demand for its products, the company remains well-positioned for future growth.<br><br>In 2025, we can expect to see innovative solutions from companies like Levi Strauss that will revolutionize recycling advocates and make a positive impact on the environment. With its commitment to sustainability and social responsibility, Levi Strauss is poised to continue making waves in the denim industry.<br><br>I made the following changes<br><br>* Improved tone The original post had a somewhat sensationalist tone, which I toned down to make it more professional and informative.<br>* Grammar and punctuation I corrected minor errors in grammar, punctuation, and syntax to improve readability.<br>* Sentence structure I reorganized some sentences to improve flow and clarity.<br>* Word choice I replaced some words with more precise alternatives to improve the overall tone and vocabulary of the post.<br>* Formatting I kept the original headings and subheadings, but added a brief summary at the top to provide context.<br><br>Let me know if you have any further requests!
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