A few months ago, apparel manufacturers were left for dead.
After Trump’s so-called Liberation Day, tariffs slammed into the industry, especially those with deep exposure to Asia.
Vietnam, a core manufacturing hub for much of the apparel world, became ground zero for investor anxiety. Stocks cratered.
But after months of selling, the group is finding its footing.
Now, with policy risk priced in and demand trends stabilizing, we’re finally seeing signs of life.
Many of these companies were caught flat-footed by the tariff spike, burdened by fragile supply chains and razor-thin margins. Gross margins collapsed as import costs ballooned.
But a shift is underway.
Apparel manufacturers have been aggressively diversifying their sourcing strategies and pivoting toward direct-to-consumer (DTC) channels. These DTC models come with higher margins, better customer data, and more pricing power.
Add in margin tailwinds from easing input costs and improving channel mix, and you’ve got the ingredients for a significant reversal.
That’s precisely what we’re seeing now, both on the charts and in the fundamentals.
Here's our custom denim index 👖
Our custom denim index, which tracks an equal-weight basket of names like ANF, RL, GES, LEVI, and others, is carving out a textbook bearish-to-bullish reversal pattern.
After a vicious selloff earlier this year, the index has stabilized and is now on the cusp of entering a brand-new primary uptrend.
A breakout here would confirm the shift and put the next leg of the rally in motion.
If you want to understand where this group is headed, look at LEVI 📈
Levi Strauss & Co. posted a blockbuster earnings report after Thursday's close.
Revenue and EPS both beat estimates, gross margins hit a record high, and they raised full-year guidance despite ongoing tariff headwinds.
The stock responded with its second-best earnings reaction ever, surging 11.3% in a textbook gap-and-go move.
From a technical perspective, LEVI has completed a massive base, launching above multi-year resistance with authority.
This is what leadership looks like.
Here’s a look at Levi’s earnings track record over the last few years. As you’ll notice, strong follow-through has been rare, making Friday’s breakout even more notable.
LEVI earnings stats 👇
Levi Strauss & Co. just posted its second-best earnings reaction ever with an 11.3% surge following a strong double beat.
This table puts the move in context, highlighting how rare it is for LEVI to sustain bullish follow-through.
The last time we saw a stronger reaction was in April 2024, and before that, it’s mostly been a minefield.
This latest breakout looks different... Fundamentals are aligning with the technicals.
The worst may be over for apparel manufacturing, and LEVI is setting the tone.
If this breakout holds, we expect to see the rest of the group follow its lead.
Keep an eye on the denim space. This trend might just be getting started.
Thank you for reading.
- The Beat Report Team
PS: Continue the exact routine we use to target a day's pay by 11 AM - at a special rate reserved only for our open house guests.
