What Retailers are Saying About Tariffs - Part 3

This is a continuation of a previous article from April 21 and from May 8 . As noted in the previous articles, this is a compilation of quotes from shippers taken from earnings transcripts (Seeking Alpha). Note that links will take you to the individual company’s investor relations page.

There’s alot of content noise so I find it useful to understand the market by reading what retailers are directly saying each quarter.

Look for another article later this week and part 4 of the What Retailers Are Saying Series on May 18.

A big thanks to you all for reading my articles. 🙏

Retailers

Tractor Supply

Q1 ending March 29. Reported April 24

• Over 60% of our business is from products that are manufactured, bagged, assembled or grown in the United States and only 12% of our business is direct imports. And on our direct imports over the last several years, we've reduced the share from China north of 90% to currently below 70%, and we're on track to be closer to 50% by year-end. Hal Lawton - Chief Executive Officer

• We're already seeing requests for price increases from select vendors in areas of the market, and I fully expect that we'll see more in the coming weeks and months. Where we take price, we will be surgical, category by category, SKU by SKU, leveraging our portfolio strategy, always with a top priority being a focus on value perception, but also always with an understanding of margin sustainability. Hal Lawton - Chief Executive Officer

• We have been actively working on resourcing around not only Southeast Asia, but in other areas of the globe over the course, really, over the last three years, pretty aggressively and have a lot of plans in place that will get us even closer to that kind of 50% or even less point by the end of this year out of China. Seth Estep - Chief Merchandising Officer

Brands

Helen of Troy

Q4 ending Feb 28. Reported on April 24

• For the moment, we have paused certain purchases from China that were destined for the US market, and will rely on our current inventory to meet short-term demand. Recall, we purchased targeted additional inventory in late fiscal '25 and early fiscal '26, ahead of tariffs. Noel Geoffroy - Chief Executive Officer

• Over the course of the past few years, we've made meaningful improvements in our supply chain to better prepare us for this moment. We consolidated down to fewer, more strategic suppliers. We are now partnering with those strategic suppliers to diversify into new geographies that we believe will be less exposed to trade disruption with the goal of achieving a lower overall cost. Brian Grass - Chief Financial Officer

• We also began dual sourcing more of our production and are now intensifying those efforts even further. We purchased additional inventory several months ahead of tariff implementation and we are using this as an opportunity to move through existing lower velocity inventory not subject to tariff. Brian Grass - Chief Financial Officer

• In light of the size of current China tariffs, the estimated tariff impact that we will not be able to directly mitigate and the expectation of cascading impacts on the economy and consumer, we are taking additional actions to reduce other operating costs, optimize the balance sheet, maximize cash flow and accelerate debt paydown. With these actions and the tariff mitigation strategies referred to earlier, we believe we can offset 70% to 80% of the tariff impact in fiscal '26 based on tariffs currently in place. Brian Grass - Chief Financial Officer

• We expect the vast majority of direct tariff cost impact will fall in the second half of our fiscal year. If consumer demand begins to slow, the weighted impact will be pushed out even further. Brian Grass - Chief Financial Officer

• With respect to diversification, we intensified our efforts in fiscal '25 and early fiscal '26 to further diversify our tariff exposure. We began to build out our internal Southeast Asia sourcing capabilities to accelerate supplier transitions out of China and in many cases dual source our production. Brian Grass - Chief Financial Officer

• We continue to believe that diversification and dual sourcing are the best strategies to mitigate supply risks now and in the future, but they come at a cost of higher operating and interest expense in fiscal '26. Brian Grass - Chief Financial Officer

Stanley Black & Decker

Q1 ending March 31. Reported April 30

• We are working to minimize the impact of higher input costs from tariffs by accelerating the repositioning of our supply chain. We estimate this to be a 12 to 24-month process, and we believe there are adjustments that could begin to contribute to reducing the impact this year. Today, approximately 15% of our supply chain for the U.S. comes from China. Through our mitigation efforts, we're focused on effectively being out of China supply for the U.S. business in the 12 to 24-month time period. This is a high priority and will remain a key focus even if China tariffs go to lower levels. Christopher J. Nelson - COO, EVP and President, Tools & Outdoor

• We also have plans to increase our USMCA compliance from where it stands today at just below one-third of Mexico's supply for the U.S. We are [also] moving with speed on price increases. We are taking a judicious approach, maintaining a long-term perspective as we make the adjustments necessary to protect our cash flow, EBITDA, and margin structure. Finally, we continue to engage with the U.S. administration as they work to achieve their trade-related goals. Christopher J. Nelson - COO, EVP and President, Tools & Outdoor

• We have developed a flexible footprint to leverage as trade policy evolves. Of the $1.5 billion to $1.6 billion in supply from the rest of the world, 75% of that is comprised of four countries, Taiwan, Vietnam, Malaysia, and Thailand. Additionally, our long-held local-for-local manufacturing and distribution strategy strongly resonates today with greater than 60% of our costs located in North America. We believe we have created a flexible and industry-leading footprint for global tools and outdoor companies that can be a competitive advantage in this environment. Christopher J. Nelson - COO, EVP and President, Tools & Outdoor

• In April, we successfully implemented a high single-digit average price increase across our United States retail partners. Given the magnitude of the current tariff rates, we are actively engaged with our channel partners about a second price increase, targeting implementation at the beginning of the third quarter. As it relates to our supply chain moves, the teams are actively prioritizing projects that we believe deliver the highest value at the quickest pace. For example, we have opportunities in our supply chain to move dual-sourced SKUs out of China and into Mexico. Christopher J. Nelson - COO, EVP and President, Tools & Outdoor

• Additionally, we are pursuing relatively straightforward supply adjustments to increase the amount of USMCA-qualified product coming from Mexico. Christopher J. Nelson - COO, EVP and President, Tools & Outdoor

• In addition to pursuing mitigation actions, we are also evaluating new commercial opportunities which leverage our U.S. plants. We manufacture a significant amount of outdoor hand tools, storage, and engineered fasteners in America. Christopher J. Nelson - COO, EVP and President, Tools & Outdoor

Newell Brands

Q1 ending March 31. Reported April 30

• We have made remarkable progress derisking our China supply base over the past several years. Recall that just a few years ago, 35% of Newell's total cost of goods sold was sourced finished goods imported from the U.S. -- into the U.S. from China. Last year 2024, that number was down to 15%. Chris Peterson - President & CEO

• In 2024, total source finished goods imported to the U.S. from all countries represented 24% of Newell's total global cost of goods sold. After netting out the 15% imported from China, Mexico, which is 98% USMCA compliant was the second largest country of origin, accounting for roughly half of the remaining 9% of U.S. imports. The remaining balance is sourced from various countries, none of which individually exceed 1% of our total global cost of goods sold. Chris Peterson - President & CEO

• More than half of our 2024 U.S. sales were manufactured through an extensive North America supply base and are not subject to tariffs. Chris Peterson - President & CEO

• Considering the incremental 125% tariffs being placed on China, we have done what many leading retailers have done and paused virtually all outstanding Chinese purchase orders. In addition, as we shared on our February call, we put a moratorium in place stating we will not be signing up any new suppliers who do not already have manufacturing capabilities outside of China or have defined plans to do so. Therefore, instead of continuing to source finished product or raw materials out of China, we will leverage existing inventory on hand while rapidly developing and qualifying alternative sourcing solutions for impacted items. Chris Peterson - President & CEO

• The other thing we are doing, which frankly, we are very excited about is aggressively selling and providing key strategic retailers access to our tariff free North America manufacturing base during what we expect to be an extended period of constrained supply in certain product categories. Chris Peterson - President & CEO

• We've been asked by a number of retailers whether we would be willing to do their private label because much of the private label products that retailers are selling are sourced from China. Our answer has been that we're not really set up to do that, so that's not what we're referring to. Instead, what we're recommending is that the retailers basically discontinue their private label product and replace it with our branded product. And in addition, there's a number of our competitive brands that are 100% sourced from Asia that are subject to significant tariffs where we are not. And so, we're recommending there that retailers replace other branded products that are sourced from Asia with our branded products that are sourced from either the U.S. or Mexico. Chris Peterson - President & CEO

• 70% of our China import exposure is the baby gear category. The balance of what's coming from China to the U.S., we've had a plan in place that we've been working on for a number of years to move out of China and we are accelerating that plan as we speak. And so there could be a small amount of impact and a few other places, but the majority of the impact is the baby gear category. Chris Peterson - President & CEO

Hamilton Beach Brands

Q1 ending March 31. Reported April 30

• We have taken proactive sourcing actions, including a pull forward inventory purchases from suppliers in Q1 to minimize tariff impact. Scott Tidey - President and CEO

• We have also recently certified our main distribution center as a foreign trade zone to help manage cash flow and tariff impacts. Scott Tidey - President and CEO

• Lastly, we are accelerating our sourcing diversification, prioritizing the movement of product manufacturing based on volume and profitability. Historically, 25% of our sales have originated outside of the U.S. and are not subject to recent tariff actions. Scott Tidey - President and CEO

• For the remaining 75% of sales that are U.S. based, we have already transitioned approximately 15% of our manufacturing out of China and expect to have two-thirds of our U.S. sales coming from outside of China by the end of 2025, with the remainder to be moved in the first half of next year. We are confident that these actions will positively benefit our margin profile in 2026. Scott Tidey - President and CEO

• We were confident in offsetting the impact of the additional 20% tariffs imposed by the U.S. on China in late February and early March through select price increases. With the reciprocal tariffs announced in April, and the subsequent escalation tariffs on Chinese imports, visibility at this moment into how the remainder of the year unfolds has become more difficult. Sally Cunningham - SVP and CFO

• One of the critical dates that occurred out there was April 10th for when things could ship before they received the retaliatory percentage of 145%. After that date, again, we feel like we've got a good inventory position in the short term. As we get closer to the holiday season and we need to start building inventory, that's when we're going to really lean on our diversification efforts or try to work out an understanding with our retail partners on what we would do with the inventory that would be coming at the higher tariff percentage. Scott Tidey - President and CEO

Columbia Sportswear

Q1 ending March 31. Reported May 1

• To-date, we have taken several actions. Prior to the April 2nd, tariff declarations, we domesticated all on-hand U.S. inventory through our own long trade zone distribution centers, saving us millions in potential tariff funds. Tim Boyle - Chairman, President & CEO

• For products that are impacted by the reciprocal tariffs, we are accelerating shipments to the extent possible in order to receive products during the 90-day tariff. Because it's not practical at scale nor affordable, we do not intend to utilize airfreight as a solution to accelerate inventory seats. Tim Boyle - Chairman, President & CEO

• China remains a strategically important country for us, and we intend to continue leading its opportunities for increased product creation and manufacturing in China, not only for our China direct business but for other markets around the globe. Tim Boyle - Chairman, President & CEO

• We have very little direct exposure to tariffs on products from China. A low single-digit percent of our finished good products imported into the U.S. are manufactured in China. Given the exorbitant tests on these goods, we will be diverting the vast majority of this product to other markets where it can be sold profitably. Tim Boyle - Chairman, President & CEO

• While much of our fall 2025 product has been ordered and sold, we are rationalizing inventory buys where possible to reduce the risk with excess inventory in a challenging environment. We're also taking actions to restrain discretionary spending and where appropriate, positive capital investments in the U.S. until we have clarity. Tim Boyle - Chairman, President & CEO

• For fall 2025, we're focused on maximizing our marketplace opportunity. We're working with our retail partners to deliver value to consumers and keep inventory and dealer margins healthy. As a result, we expect to absorb much of the incremental tariff costs in 2025 at the current incremental 10% universal rate. Tim Boyle - Chairman, President & CEO

• For 2026, we're contemplating strategies to offset the impact of higher U.S. tariffs on our business. We have a team of experts exploring possibilities to mitigate the impact of increased tariffs, including redesign, redevelop, resource and reprice products among other mitigation factors. Overall, we're taking a multipronged approach to managing the business during this period of uncertainty. Tim Boyle - Chairman, President & CEO

Stay tuned for more quotes on tariffs. Part 4 will go out May 18 .

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Thanks!

- Cathy

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I wear a number of hats these days. I’m also helping out the Reverse Logistics Association as a research manager, and at JOC, I help out as a research analyst and write a weekly LinkedIn newsletter, Freight Forward, summarizing JOC & other published articles and providing an outlook for the week ahead. In addition, be sure to check out my website and be sure to sign up to receive more blog posts.