Levi Strauss & Co.’s plan to navigate President Donald Trump’s “Liberation Day” tariffs relies on an agile global supply chain and deep vendor relationships.
In the company’s Q1 2025 earnings call on Monday, Michelle Gass, LS&Co. president and chief executive officer, said the San Franscisco-based company’s ability to pivot will be key to how they address the issues in the short, medium and long term.
LS&Co. sources from 28 countries, 20 of which are countries that are imported to the U.S. Companies in Bangladesh, Cambodia, Egypt, Pakistan, Sri Lanka and Vietnam are among Levi’s top vendors—countries that Trump placed 10-49 percent “reciprocal” duties against on April 2.
Describing the situation as “fluid,” Harmit J. Singh, LS&Co.’s executive VP and chief financial and growth officer, said they’re the process of scenario planning and determining different mitigation strategy.
“We recognize this is a quickly evolving macro situation and we have to see where the dust settles to give you the guidance that is going to be as helpful to you as possible,” he said.
For now, LS&Co.’s full year outlook remains unchanged and includes no impact from Trump’s tariff spree. However, Gass mention three times during the call that almost 60 percent of the company’s revenue is generated outside the U.S., underscoring the value of its international business especially if the U.S. falls into a recession.
Singh said the Q2 outlook remains consistent with the company’s internal plan. “The effects of tariffs will have a minimal impact to our margin structure in the quarter, as most of the product for spring, early summer is already in the U.S.,” he said, adding that Q2 is seasonally the company’s lowest quarter for revenue and margins in the year.
In uncertain times, Levi’s leans on its heritage—a narrative that Gass highlighted during the call.
“As an iconic brand with more than 170 years of history, we’ve weathered challenging times before. We have a playbook that begins with leveraging the strength of our brand and our deep connection with consumers. We know, especially during times like these, people turn to the brands they know and trust and prioritize value and quality. And that’s what Levi’s has always stood for,” she said.
Growth spurts
Levi’s brand was up 8 percent for the quarter. Sales in the U.S. increased 8 percent and international grew 9 percent, driven by growth in Mexico, the U.K., France and Germany. Two-third of the growth was led by units and a third by higher AUR.
Levi’s DTC-first strategy continues to gain momentum with DTC sales up 12 percent in Q1. DTC ended the quarter at 52 percent of total global net revenues, accounting for over half of the brand’s total revenue. New store openings in Italy, Mexico and India, a broad assortment of products and strong e-commerce sales supported this growth. Gass said AURs in the DTC channel are up mid-single digits as consumers gravitate to premium products. The brand also intentionally pulling back on promotions in Levi’s stores.
“DTC productivity actions, including improving the front-of-house consumer experience and back-of-house efficiency, are driving growth across key metrics, including strong conversion and traffic trends, fueling significant margin expansion in this channel,” she said. “I see firsthand how our strategies and actions are driving these results when I walk our stores and get feedback from our team.”
Online, the brand is working to elevate the consumer experience by upgrading the content on the site with higher quality imagery and enhanced storytelling. “We’re featuring more use of videos on our product detail pages, which allow our consumers to see our products in motion. And we’re seeing a strong response from our consumers with customer satisfaction scores for the U.S. e-com business rising to its highest level ever,” Gass said.
Wholesale business delivered another quarter of growth, up 5 percent. Gass said U.S. wholesale exceeded expectations in the quarter, up 9 percent, in part driven by door expansion and more space for Levi’s broadened lifestyle assortment.
Gass said the women’s category continued to accelerate, growing double digits over the last two quarters and now represent 38 percent of net revenues. Tops represents more than 20 percent of the heritage brand’s business, which has more than doubled over the last ten years.
Newer categories that offer a “denim lifestyle” like dresses, skirts and outerwear are also in growth mode, outpacing the rest of Levi’s business. Gass points out that while Levi’s remains the leader in jeans, the brand’s portfolio “beyond denim bottoms” comprises 35 percent of total sales.
In Q1, bottoms were up 9 percent. Gass attributed the success Levi’s achieved in volume to its fit diversification strategy.
“We have a style for everyone, for every occasion and for any time of year. Loose and baggy fits, which make up roughly 15 percent of our total bottoms portfolio, continue to be a significant growth driver. For her, we’re building on the trend with new fits. A great example is our launch of the Cinch Baggy, available across both DTC and wholesale, which went viral on TikTok and created tremendous interest with search volumes surpassing 200 million,” she said.
Levi’s also introduced the 568 loose straight and the 578 baggy for men. “While there’s so much buzz around the loose and baggy trend, slim and skinny styles remain a wardrobe staple and comprise more than 20 percent of both our women’s and men’s bottoms businesses,” Gass said.
