It is no secret that consumers have been reducing their spending over the past few months due to concerns such as inflation, higher costs of living, and the looming threat of tariffs.
Amid these headwinds, Levi’s (LEVI) , famous for its denim apparel, continues to resonate well with consumers as it has recently seen increased sales and profits.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💵
In Levi’s first-quarter earnings report for 2025, it revealed that its net revenues in the U.S. increased by 8% year-over-year due to positive traffic and higher full-priced sales.
Related: Levi’s CEO sounds alarm bells on concerning consumer trend
Levi’s CEO addresses a major concern
Despite this recent success, Levi’s CEO Michelle Gass acknowledged during an earnings call on April 7 that the company is operating during a challenging time.
“Given last week’s tariff announcement, we’re dealing with a dynamic macro environment,” said Gass.
Tariffs are taxes companies pay to import goods from overseas, and the extra cost is often passed down to consumers through price increases.
On April 2, President Donald Trump announced a 10% “baseline” tariff on all countries importing goods to the U.S., with roughly 60 countries seeing higher tariff rates, in an effort to free the nation from its reliance on imported goods.
However, on April 9, Trump increased his previous 34% tariffs on China to 125%, and paused reciprocal tariffs on all other countries for 90 days, bringing them down to a universal rate of 10%.
Levi’s considers harsh changes amid tariff threat
During the call, Gass said that while tariffs pose a “significant challenge” to Levi’s, it has the capability to pull several levers, including potential price increases, to minimize the threat.
“We will work with our vendors, with our customers to understand the best way forward,” said Gass. “And then pricing is a potential lever, I would say. As we think about it, we will very much think about any pricing, if we do take pricing, very surgically.”
Related: Apple makes unexpected move to dodge high tariff costs
She also claimed that recent customer behavior has been causing prices to increase.
“One of the things we’ve seen our consumer do is they’re actually driving price up,” said Gass. “You saw our AURs (the average selling price of an item) again this quarter increase as they gravitate to more premium products. So we expect that to continue. There could be more pricing power in our more premium products. So we’ll look at that.”
Gass also warned that the company may consider further reducing promotions and might even “test pricing” in areas where it sells directly to consumers.
More Retail:
- AT&T quietly issues stern warning to customers
- Sam’s Club makes a big change to a beloved membership perk
- GameStop announces risky move amid store closures
Levi’s latest plan to combat tariffs comes after Gass said during a Shoptalk event on March 26 that the company will double down on making its products more innovative to attract price-conscious consumers.
“It’s up to us,” said Gass. “If the wallet’s tighter, then we have to work harder. We have to work harder in driving brand relevance. We’ve got to make sure that every single time they’re coming into one of our stores, it’s a phenomenal experience. And we’ve got to keep innovating and bringing them newness and things that they can’t resist buying. That’s our job.”
Gass also emphasized that Levi’s products have “an approachable price point.”
“There are jeans that cost a lot more; there are jeans that cost less,” said Gass. “But it is an approachable price point to start.”
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
