Levi Strauss & Co. is having a moment. Denim sales are surging as fashion trends shift back to iconic looks, including white shirts and jeans. The trend shift is driving denim sales, raising Levi’s sales and profit.
Kylie Jenner helped rekindle broad interest in jeans and white shirts this summer after she was often seen wearing a simple white tank top and jeans. Jenner even wore mid-rise jeans to celebrate the launch of Kylie Cosmetics at Ulta.
Levi’s at a glance
- Annual revenue in 2026 (est): $6.55 billion, up from $6.23 billion (est) in 2025.
- Global reach: 50,000 locations in 120 countries worldwide.
- Number of employees: 18,700.
Source: Levi’s Strauss & Co.
It’s certainly not the first time Levi’s has enjoyed such a moment. Jeans have been popular for decades, inspired by greats stretching back to James Dean’s iconic jeans and white t-shirt look in the 1950s. Look in the closets of nearly every American, including me, and you’re bound to find at least one pair of Levi’s, or a pair from rivals like True Religion or Wrangler.
“The denim category is accelerating both here in the U.S. and globally. And as the definitive market leader, we are very well positioned to take advantage of that,” acknowledged Levi’s President Michelle Gass on Levi’s earnings call on Oct. 9.
The company’s success aside, another concerning customer trend has emerged, and it’s far more widespread than Levi’s. During a recent conference call with investors, Levi’s joined other apparel companies, including Nike, to say customers will pay more for their products in the months ahead.
Denim customers have choices
Apparel, like jeans, is a discretionary purchase. When budgets are tight, shoppers don’t need to buy more clothing or buy new. Instead, they can visit thrift shops or extend the life of existing clothes in their wardrobes.
There are also many options at varying price points. Shoppers can buy denim online at Amazon from many manufacturers or visit Walmart or Target to buy clothing at varying prices. For example, Walmart offers jeans under its private label brands, including No Boundaries and Free Assembly, often at much lower prices than brand-name makers, including Levi’s.
More retail:
- Major office supply retailer sold after it closed 1,000 stores
- AutoZone makes harsh decision customers won’t like
- Iconic retail chain closed 80% of its stores
Still, many continue to buy Levi’s despite other choices because of their quality and a long history that’s made it one of the world’s most recognized brands.
It’s loyal fan-base is well-deserved. Levi’s invented blue jeans in 1873 at its San Francisco, California headquarters, and its Levi’s 501 Original Fit Jeans are one of the most popular pieces of clothing ever sold, hauling in about $800 million annually.
Levi’s popularity gives it more price flexibility than rivals, but that doesn’t necessarily mean shoppers are completely oblivious to prices.
Tariffs hit apparel companies hard
Like most apparel companies, Levi’s has come under increased pressure this year because of President Donald Trump’s decision to ramp up tariffs on imports.
According to the American Apparel & Footwear Association, about 97% of U.S. apparel is manufactured overseas, meaning tariffs apply to almost everything we wear.
Related: Iconic mall retailer makes comeback after closing 100s of stores
Tariffs’ bite varies depending on where the garments are made, but the taxes are stiff regardless.
For example, Vietnam, Cambodia, Bangladesh and Indonesia, major apparel manufacturing countries, face import taxes of about 20%. China apparel tariffs can exceed 50% when considering all the various tariffs stacked upon each other, and those could rise much more given President Trump just threatened an additional 100% tariff on the country beginning Nov. 1.
This means that the cost to big apparel companies, including Levi’s, totals billions of dollars, and bringing that production back into America isn’t likely, given that most of our mills have long since shuttered and workers have moved on to other industries.
While Levi’s made most of its jeans in the U.S. in the 1950s, mainly at plants in California, it began shifting production to China and Mexico in the 1980s to take advantage of lower manufacturing costs. It closed its last manufacturing facilities in Jan. 2024, ending the production of its Levi’s jeans in America. Nowadays, its clothing is made by contract manufacturers in 25 countries, including China, Bangladesh, Vietnam, India, and Mexico.
Industrywide, U.S. textile and apparel companies employed an estimated 2.5 million people in the 1950s, and at their peak, major companies like Levi’s operated dozens of factories across the country. However, according to the Bureau of Labor Statistics, just 266,000 workers were employed in the industry as of August. That means the industry has lost about 90% of its workers.
Levi’s shifts to full price model, boosts prices
The reliance on imports means Levi’s faces a much bigger tax bill this year than last. According to the Yale Budget Lab, the effective tariff rate in the U.S. stands at 17.4%, the highest since 1935, and up from 2.4% in January, before new tariffs were enacted.
Levi Strauss & Co. revenue by fiscal year:
- 2025: $6.2 billion (est.)
- 2024: $6.4 billion
- 2023: $6.2 billion
- 2022: $6.2 billion
- 2021: $5.8 billion
Source: Levi Strauss & Co. 10-K filings with the SEC.
“Our updated guidance reflects the latest tariff rates, which include 30% for China and an increase to approximately 20% for the rest of the world. This is higher than our last assumption. And as a result, we estimate the full year gross impact of tariffs before mitigation to be approximately a 70 basis point headwind to gross margin compared to 50 basis points previously,” said CFO Harmit Singh on Levi’s earnings call.
The company is negotiating with suppliers and cutting costs elsewhere, but it won’t absorb the new tariff hit entirely.
As a result, it’s embracing a shift to a full-price model, resisting discounts, and selectively increasing prices where it can.
“We have taken moderate pricing, and we’re driving higher full-price sales,” said Singh.
Despite shrinking the number of products it produces and selling more across countries to increase scale and reduce costs, the company’s push toward full-price sales and higher prices will continue into 2026.
“We probably see tariff impact in the second half of this year, next year in the first half,” said Singh. “We’re looking at pricing opportunities, again, targeted, not only in the U.S. but globally… We continue to focus on full price selling, and it’s not anywhere close to 100%.”
As a result of efforts to offset the hit to its bottom line caused by tariffs, including price changes, Levi’s expects only a 0.20% drag on its gross margin or about two to three cents of a hit to its earnings per share.
“Looking to 2026, we are continuing to take actions to offset the impact of tariffs. As a reminder, these mitigation initiatives include promotion optimization, targeted pricing actions, vendor negotiation and further supply chain diversification.” said Singh.
Wall Street weighs in on Levi’s
While tariffs drag on results, demand strength and efforts, including its pricing decisions, are fueling higher profits than last year.
Sales in its fiscal third quarter, ending August 31, grew 7% year over year to $1.54 billion, while EPS increased 3% to 34 cents per share. Levi’s stock price is up 22.5% year-to-date, outpacing the S&P 500’s 13% gain.
Wall Street estimates that Levi’s earnings per share will climb from $1.33 in 2025 to $1.46 in 2026.
After the company’s quarterly update, Bank of America analysts wrote:
“Guidance likely to prove conservative; beat and raise story continues… Continued global share gains and a strong denim category should drive consistent MSD sales growth and margin expansion.”
The analysts also pointed to the strong demand trends remaining despite higher prices.
“We think upside potential to this guidance could come from a combination of lower promotions (assuming consumer demand remains strong) and FX (if rates hold). LEVI has selectively increased pricing globally and has not seen any negative impact.”
Bank of America rates Levi’s a “buy,” with a stock price target of $27, up 27% from its price at last check.
The resilient demand so far is unlikely to change Levi’s approach to pricing, especially given Wall Street’s support.
