“As an industry that faces a $3 billion duty bill every year, we can assure you that any increase in the cost of importing shoes has a direct impact on the American footwear consumer,” according to the letter.
That sentiment has been echoed around the industry. “We don’t make enough to absorb that,” said Michael Jeppesen, president of global operations for Wolverine World Wide Inc., which also signed the letter. “The only way it can is to be passed onto the consumer.”
Seeing Upside
Some companies that anticipated trade tensions, however, see opportunity as demand for sportswear booms in China. Puma SE has moved production to countries including Vietnam and Bangladesh -- while continuing to churn out products in China for that country’s consumers, CEO Bjorn Gulden said on an April 26 call.
“To be honest, the trade war between China and the U.S. is a little bit of a gift,” Gulden said. “We can produce targeted products for the Chinese market in China, which saves for duty and other costs.”
The companies in the letter vary in their reliance on China. Nike, for example, made about one-quarter of its apparel and footwear in China in fiscal 2018. Puma sourced 24% of its products from China, compared with 32% from Vietnam. And while Skechers U.S.A. Inc. makes around 65% of its goods in China, not all of those products are destined to be sold in the U.S.
Under Armour Inc., which also signed the letter, gets about 18% of its products from China -- down from 46% in 2013. The company’s goal is to lower that number to just 7% by 2023.
This article provided by Bloomberg News.