Levi’s (LEVI) execs just gave a market nervous over bruising tariffs a taste of what’s to come for earnings season.
A heavy dose of confusion, with a lack of clear cut guidance for investors in search of badly needed clarity.
“Given that the situation is fluid and unprecedented, the impacts are uncertain. We are in the process of scenario planning and determining different mitigation strategies. 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,” Levi’s long-time CFO Harmit Singh said on a late Monday earnings call.
“For now, our full-year outlook remains unchanged and includes no impact from the proposed tariffs.”
Levi’s CEO Michelle Gass said the company has assembled an internal “task force” to determine the tariff impact and proper responses, such as price increases.
The company relies on 130 facilities in China and 50 in Vietnam — two countries Trump earmarked for large tariffs — to produces its various apparel offerings.
At least for now, the market thinks Levi’s may be able to overcome some tariff headwinds.
Shares rallied more than 10% in pre-market trading on Tuesday on the unchanged profit outlook and a 10 cent quarterly earnings beat. Execs said on the call that demand remained solid through the end of March.
Levi’s shares were among the top trending tickers on the Yahoo Finance platform.
But whether the post earnings rally can be sustained is up in the air.
President Trump uncorked a baseline tariff rate of 10% that went into effect on Apr. 5.
A higher tariff rate will start on Apr. 9 for about 60 countries that the administration considers to be the worst trade offenders.
Some of those nations are important sourcing and business regions for large US retailers in Levi’s and Nike (NKE). China, for example, will see reciprocal tariffs of 34%. Vietnam clocks in at 46%.
The reciprocal tariffs are on top of existing duties, such as the 20% Trump imposed on China earlier, bringing the total rate on the country to 54%.
China has retaliated with a 34% tariff on American goods. Trump fired back on Monday, threatening an additional 50% tariff on China if the country doesn’t remove its US tariffs.
“Levi’s isn’t immune to cost shocks or consumer slowdown: for sensitivity, we estimate tariffs could represent a high-single digit percentage hit to calendar 2026 earnings power assuming no degradation in consumer demand; and could represent mid-teens percentage hit to calendar 2026 earnings power assuming a mid-single digit percentage impact to quantity demanded,” Stifel apparel stock analyst Jim Duffy said in a note on Tuesday.
