Ugg Parent, Dick’s & Shoe Carnival Are the Latest Retailers to Tackle Trump’s Tariffs
Retailers continue to throw gas on trade war fears.
After the company reported first-quarter earnings that exceeded expectations, Dick’s Sporting Goods Inc.’s CFO and EVP Lee Belitsky today tackled the trade war’s potential impact on consumers during a conference call with investors.
Related stories
What Top Execs From Target, JCPenney, Kohl's and More Are Saying About Trump's China Tariffs
Consumer Confidence Is Rising Despite Trade War Fears
China Trade War Refuels Talk of Sourcing Alternatives, but There's No Solution for Most Brands
“For us, these tariffs were mostly concentrated in our hardlines categories and were factored into our original 2019 guidance,” Belitsky said. “We’re still working through the impact of this increase with our manufacturing and brand partners and how this may influence our overall pricing strategy… I would say it’s more a little bit of general concern around where the consumer will be through the back half of the year, particularly if the tariffs ramp up going forward.”
In the past month, top executives from major fashion and footwear businesses have spoken out about the potential impact of President Donald Trump’s latest threat of tariffs on Chinese imports.
Last week, more than 170 shoe companies signed a public letter — endorsed by the Footwear Distributors & Retailers of America — that called for the removal of footwear from Washington’s fourth tranche of tariffs against Beijing. It came less than two weeks after the United States increased levies from 10% to 25% on $200 billion worth of Chinese goods, leading China to retaliate with duties of 5% to 25% on $60 billion of U.S. products.
The Office of the U.S. Trade Representative also released a list of imports, including footwear, that could be hit with a proposed 25% hike in tariffs. Many retailers have bemoaned the possibility of raising prices for American families in response to growing costs within their supply chains.
“We will pass on the prices if we have to,” Columbia Sportswear Co. CEO Tom Boyle said in an interview yesterday on Bloomberg TV. “This is a very disruptive event for us. The big issue is really the uncertainty we face in trying to grow our business; we’re spending way too much time worrying about Trump’s trade war as opposed to selling our products.”
A number of manufacturers have already begun looking at other countries to avoid the taxes, with some shifting part of their production to Vietnam, Indonesia and neighboring nations as trade war uncertainties continue.
Others have considered moving their factories to domestic supply chains. However, the current U.S. infrastructure coupled with issues related to talent and manufacturing costs have created complex challenges.
“We are aware of and continue to monitor tariff decisions and worked closely with our supply chain operations to identify risk-mitigation strategies. This includes the potential to adjust shipment timing, which could have abnormal effects on the timing of inventory level,” Deckers Outdoor Corp. CFO Steven Fasching said in the company’s earnings call on Thursday. “We have been actively shifting production outside of China, and less than 20% of our global total would be subject to tariff[s].”
About 98% of shoes sold in the U.S. are made abroad, with China accounting for 70% of that figure. If Trump’s threatened tariff increase takes effect, each American family would have to spend an extra $131.93 on footwear every year, according to the FDRA. It added that consumers overall would pay $7 billion in additional costs annually for shoes.
“We are working very hard to try to make sure these tariffs don’t go through,” Shoe Carnival Inc. CEO, president and director Clifton Sifford said. (The company was among the 170 that signed the FDRA-released memo.) “We are already the highest tariffed apparel industry, and it just makes absolutely no sense. We can’t just sit back and hope that it doesn’t happen, so we are making changes.”
Watch FN’s interview with these top shoe players.
Want more?
What Top Execs From Target, JCPenney, Kohl’s and More Are Saying About Trump’s China Tariffs
FDRA President and CEO Matt Priest Talks About Tariffs, Finding Shoe Talent and Diversity
Sign up for FN's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
