Good morning. Levi Strauss & Co. is a retail giant in business for more than 170 years. The company is on a growth trajectory with a plan to navigate the uncertainty around tariffs.
Levi’s exceeded revenue and profitability expectations in Q1 with 9% organic growth and 400 basis points improvement in EBIT margins. Gross margins hit a record 62.1%. International business grew at 9% and now accounts for 60% of revenue. Levi’s counted a 12% increase in its direct-to-consumer business. And the brand is winning in the 18- to 30-year-old demographic.
In response to tariff tumult, some public companies are foregoing the tradition of predicting quarterly profits. However, Levi’s said in its Q1 earnings announcement on April 7 that it would maintain 2025 top- and bottom-line guidance, which excludes any impact from the recent tariff announcements; and the company anticipates minimal impact on its Q2 margin outlook.
“Given the results in Q1 where we beat expectations on the top line and the bottom line, we were actually debating internally whether we should raise full-year guidance,” Harmit Singh, chief financial and growth officer at Levi’s, told me.
On April 2, following the Trump administration’s announcement of so-called reciprocal tariffs, Levi’s tariff task force continued its scenario planning. “The situation was evolving so fast,” Singh said. “We didn’t know if the tariffs would stay. We didn’t know what the impact on consumer demand would be.”
Singh, CEO Michelle Gass, and the board ultimately decided to announce on April 7 that Levi’s would maintain its full-year guidance, and give a little bit more guidance regarding Q2, he said. “The goods to be sold in the U.S. for the spring and summer were already mostly here, and we’re not necessarily seeing any adverse reaction from the consumer,” Singh said.
A diverse supply chain and liquidity
On April 9, President Trump announced the 90-day pause on most tariffs. During the time out, a 10% universal tariff will be in effect. The U.S. currently imposes a minimum tariff rate of 145% on goods imported from China (with the temporary exemption of certain electronics) as that trade war escalates. Amid the continuing uncertainty, Levi’s supply chain diversification has been an asset, Singh said.
“Eight or 10 years ago, we were sourcing into the U.S. 15-16% from China,” he explained. “Today, it’s approximately 1% because we’ve been able to move things around to different parts of the world.”
Among Levi’s top vendors are companies in Vietnam, Egypt, Bangladesh, Cambodia, Sri Lanka, and Pakistan. The company sources from 28 countries, with no more than approximately 25% sourced from any single country, according to Levi’s.
As part of the scenario planning, Levi’s is actively identifying opportunities to partner with its vendors and share some costs, at least in the short term, Singh said. The company is also working with its customers who are wholesale retailers to figure out what steps to take if there is a change in demand, he said.
“Our product gives great value for the money,” Singh said. “It’s evident in the market share and growth we are seeing.” But during times of uncertainty, he and his team are evaluating scenarios on whether the company should raise prices or reduce promotions, for example.
Singh is a veteran CFO, with Levi’s for 12 years and, before that, CFO at Yum Restaurants International, Pizza Hut U.S., and Hyatt Hotels. He has a lot of experience operating under macroeconomic conditions and uncertainty.
“What is really important is the balance sheet,” Singh told me. “Do you have enough cash? Do you have enough liquidity?” He added, “We have close to $1.4 billion in liquidity. Our cash position is very strong.”
Singh also offered some advice: In times of crisis or an economic slowdown, “agility, as well as preserving profit, preserving cash, and staying connected to your customers and partners—that’s very, very critical.”
SherylEstrada
sheryl.estrada@fortune.com
Leaderboard
David Ayanoglou was appointed CFO of Healthcare Triangle, Inc. (Nasdaq: HCTI) a health care tech company. Ayanoglou has over 22 years of corporate finance experience. In the last four years, he has been consulting clients on M&A transactions, corporate reporting and CFO-related matters in the technology and health care spaces. Before that, Ayanoglou was a director of valuations and transaction support at Open Text where he served for over 13 years.
Jennifer Cote has resigned as CFO and treasurer of Harvard Bioscience, Inc. (Nasdaq: HBIO), effective upon the filing of the company’s quarterly report on Form 10-Q, which will be filed on or before May 12. Mark Frost was appointed interim CFO and treasurer. Frost brings over 30 years of financial and executive-level management experience from both private and public companies. He has served as a consultant to the company since January 2025. Frost previously served as the CFO of Fathom, a digital manufacturing company.
Big Deal
A new S&P Global Market Intelligence data and analysis finds the total transaction value of global private equity and venture capital-backed rounds of funding reached $66.01 billion in March, more than four times the transaction value in February.
Technology, media and telecommunications (TMT) recorded the highest transaction value in March, receiving 81.6% of total investments, according to the report. OpenAI’s $40 billion round of funding led by SoftBank Group Corp. drove the total transaction value in March. It was followed by Anthropic PBC’s $3.75 billion series E round of funding.
Application software remained the most favored subsector within TMT, recording 225 deals, followed by system software with 48 deals. Deal volume across all TMT subsectors were down compared to March 2024.
Going deeper
“How Contracts Can Help Firms Navigate the Uncertainty of Global Tariffs” is a new article in Harvard Business Review. In response to tariffs, many companies have been scrambling to protect their supply chains and profitability, making contract management a critical strategic function, according to the authors. The article recommends businesses strengthen their contractual frameworks to navigate the new tariff reality while protecting operations from disruption.
Overheard
“The solution isn’t top-down—it’s ground-up. State leaders, employers, and educators must collaborate to modernize workforce readiness—before the next disruption hits.”
—Caroline Casagrande, the executive director of state and federal relations for Stride Inc., writes in the Fortune opinion piece, “Tariffs, AI, and a broken pipeline: The workforce crisis no one’s ready for.” Casagrande was U.S. Deputy Assistant Secretary of State of Education and Cultural Affairs during President Trump’s first term.
