Footwear Firms Navigate Tariff Uncertainty amid Evolving Trade Landscape

Footwear companies are actively recalibrating their strategies to navigate the complexities of international trade, especially in response to fluctuating tariff rates. As trade negotiations between the U.S.and China continue, thes firms are employing various tactics to mitigate potential financial impacts, including diversifying their sourcing and adjusting pricing strategies to offset increased costs associated with tariffs.

Impact of Trade Tensions on Footwear Industry

The footwear industry faces significant challenges due to ongoing trade tensions and the potential for increased tariffs. Many companies initially responded to the threat of a 145 percent tariff rate by shifting production out of China.However, these moves have resulted in added costs, which are expected to impact full-year profits.

Moast shoe firms withdrew their financial guidance for the year following the release of their first-quarter earnings, primarily due to uncertainties surrounding tariffs and concerns about consumer spending. The unpredictable nature of trade policies has made it difficult for companies to accurately forecast their financial performance.

Did You Know? The global footwear market is projected to reach $473.69 billion by 2028, growing at a CAGR of 5.8% from 2021 (Fortune Business Insights).

Strategies for Mitigating tariff Impact

Footwear firms are implementing several strategies to mitigate the impact of tariffs.These include:

• Diversifying sourcing to countries outside of China.
• Adjusting pricing to offset increased costs.
• Optimizing inventory management to reduce exposure to tariffs.

Academy Sports + Outdoors, for example, accelerated domestic inventory receipts of evergreen products at pre-tariff prices and reduced inventory receipts to maintain flexibility.caleres Inc. faced additional costs associated with moving goods and canceling orders related to tariffs. The company anticipates sourcing 10 percent or less of its products from China in the latter half of 2025, a significant reduction from previous projections.

Pro Tip: Companies should conduct thorough risk assessments to identify potential vulnerabilities in their supply chains and develop contingency plans to address them.

Company-Specific Responses

Several footwear companies have shared their strategies for navigating the tariff landscape during earnings calls.

• Crocs Inc.: CEO Andrew Rees highlighted the daily uncertainty surrounding tariff levels and emphasized the company’s diversified sourcing mix. Crocs has implemented targeted price increases to mitigate specific issues and is adopting a “wait-and-see” approach to future pricing decisions.
• Steve Madden Ltd.: CEO Ed Rosenfeld stated that the company is moving swiftly to adapt to the changing landscape, focusing on mitigating near-term impacts while positioning the company for long-term growth. Steve Madden aims to dramatically reduce the percentage of goods produced in China.

Steve Madden is considerably reducing its reliance on Chinese production. Fall production in china for brands such as Steve Madden shoes or Dolce Vita shoes is expected to be minimal. While some apparel production will remain in China, it is projected to be less than 5 percent. Last year, the company sourced 71 percent of its U.S. imports from China.

Analyst perspectives

BTIG equity analyst Janine Stichter noted that even with lower China tariffs at 30 percent, the impact will still be felt due to the costs associated with shifting production.companies that have already moved out of China may find it challenging or uneconomical to return promptly. stichter described the rapid move out of China as “prudent” to mitigate the risk of being subject to higher tariffs.

Despite some companies implementing selective price increases, stichter anticipates further hikes, with most companies planning adjustments starting in July. These increases are expected to be in the low to medium single-digit range to avoid demand destruction.

Current Tariff Landscape

U.S. Treasury secretary Scott Bessent stated that the current tariff rate on China imports to the U.S. is 30 percent.Trade negotiations between the two countries are expected to continue, with a temporary pause in tariff escalations scheduled to end in August.

Many companies are operating under the assumption that current pause rates will remain in place for the remainder of 2025, given the lack of clear guidance from Washington.

summary of Key Actions by Footwear Companies

What strategies do you think will be most effective for footwear companies navigating these tariff challenges? How might these trade dynamics affect your purchasing decisions?