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By Savyata Mishra
(Reuters) -Levi Strauss maintained on Monday its annual forecast for sales and profit, excluding the impact of tariffs, and posted quarterly profit ahead of Wall Street targets, sending its shares up more than 7% in after hours trade.
Sweeping tariffs by President Donald Trump have sparked concerns over a global downturn and sharp price hikes for items such as clothing and footwear.
"While we recognize that we are operating in an uncertain environment, our global footprint, strong margin structure, and agile supply chain position us to navigate the balance of the year and beyond," President and Chief Executive Michelle Gass said in a statement on Monday.
The company said in January that a diverse supply chain across 25 countries would allow it cross-source products.
Levi imports only about 1% of its merchandise directly from China into the U.S., while that for Mexico was about 5%, its executives said in January.
The retailer is looking at price increases as one of the mitigating measures, said Gass, adding that price increases will be "surgical."
It has seen demand for wide-legged and skinny jeans hold up - a trend in line with rivals such as Abercrombie & Fitch and Gap - despite shoppers being selective in spending on discretionary items.
In its quarterly filing with regulators, the company added that it was analyzing the impact of tariffs and what it could do to minimize impact.
"We expect these new tariffs to have a material impact on our results of operations in fiscal year 2025," it added.
It also said the environment could affect production and distribution.
"If these disruptions persist, they may require us to modify our current sourcing practices, which may impact our product costs, and, if not mitigated, could have a material adverse effect on our business and results of operations," it warned.
"Given that the situation is fluid and unprecedented, the (tariff) impacts are uncertain," CFO Harmit Singh said on a post-earnings call.
Rachel Wolff, an analyst at eMarketer, said, "Levi Strauss' unchanged forecast shows the sheer impossibility of planning ahead, as uncertainty surrounding Trump's tariff moves paralyzes brands."
As part of its plan to streamline operations, Levi said last October it was exploring a sale of Dockers, which has seen demand struggle.
The company expects fiscal 2025 net revenue to be down in the range of 1% and 2% and adjusted earnings of $1.20 to $1.25 per share.
On an adjusted basis, it earned a profit of 38 cents per share in the quarter, compared to estimates of 28 cents.
(Reporting by Savyata Mishra in Bengaluru and Anuja Bharat Mistry; Editing by Alan Barona and Christopher Cushing)