Lever Style CEO Stanley Szeto said while US tariffs on most garment-producing countries have come down to the 20% range, the US economy remains on edge, and he believes there is a “meaningful risk of a major downturn in the equity and/or crypto markets that could create the reverse wealth effect and tip the US into a recession.”
“There is a growing trend of retail bankruptcies, which have knock-on effects on brands and the supply chain. The recent Saks Global bankruptcy filing in January 2026 is causing brands, some of which are our clients, to write off receivables. Many brands’ credit standing are deteriorating, and we will remain very conservative in managing credit risk,” Szeto said.
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Reporting its full year results, Lever Style said its 2025 revenues fell 10.2% to $200m on the back of higher tariffs and the liquidation of longtime client Bonobos. Despite this it booked a record-high net profit margin, which it attributed to tight cost controls and improved operating efficiency, aided by its digitalisation progress.
Szeto said: “Reciprocal Tariffs made 2025 the most challenging year for the industry since COVID. US tariffs on most apparel-producing countries started in the 30–50% range in April 2025, with tariffs on China spiking to an embargo-like 150% at one point during the year. Most brands that sell into the US initially reacted to the tariffs by freezing order placement. Both the level of tariffs and the uncertainty played havoc on the industry. After the initial freeze on orders, most brands kept their buying commitments curtailed in fear of committing to higher tariffs today when tariffs could be lower tomorrow. When it was clear tariffs were here to stay, and tariff-induced retail price increases were inevitable, brands expected softening consumer demand and further reduced their purchase levels.
“Against the tariff backdrop, we did well to have achieved record-high net margin and registered growth for the rest of our customer portfolio outside of the former two top clients from 2024. This is a testament to the strength of our versatile, asset-light business model.”
The year also saw it acquire activewear maker Active Apparel Group (AAG), and Lever Style said it is seeing early success of digitalisation and platformisation, which is helping competitiveness and profitability going forward.
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By GlobalData“Beyond AAG, we are continuing to explore other strategic merger and acquisition opportunities to further strengthen our product category portfolio, expand our production base, and gain scale that creates synergies and operating leverage. Brands’ and retailers’ declining financial fortunes impact not just us alone, but our potential acquisition targets as well. With little relief in sight from a US tariff-impacted world, we expect there will be more merger and acquisition opportunities at reasonable valuations.
“In a year best described as playing defence rather than offence, we cautiously managed our business to minimise bad debt risks, navigated the year with record-high net margin, and added to our cash pile. By concluding the AAG acquisition in late 2025, we put ourselves back on the growth path for 2026 in spite of the challenging economic environment. Despite the slight reduction of net profit, we are maintaining the same HK7.0 cents final dividend level as the prior year, resulting in a dividend payout ratio of 51.7%.”
