Levi Strauss warns tariffs will hit Q4 margins; shares slide premarket

Levi Strauss ($LEVI) said shifting U.S. tariff policies will shave about 130 bps from Q4 gross margin and kept year-end assumptions at 30% tariffs on China and 20% on other sourcing countries. Despite slightly raising full-year EPS guidance to $1.27–$1.32, the midpoint trailed estimates, and shares fell around 7–8% premarket. Levi sources heavily from South Asia (Bangladesh, Cambodia, Pakistan), making it more exposed to tariff-related costs. Similar pressure was noted for peers like $RL, $ANF and $TPR.

Winners

Off-price retailers (benefit from trade-down and vendor overstock)

Why: Tariff-driven price hikes on branded apparel can push shoppers to value channels; brands may divert excess inventory to off-price to defend cash flow.

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