What Retailers are Saying About Tariffs - Part 4
This is a continuation of previous articles from April 21, May 8 and May 11.
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 shippers are directly saying each quarter.
Look for another article later this week and part 5 of the What Retailers Are Saying Series on May 25.
A big thanks to you all for reading my articles. 🙏
Retailers
Sally Beauty Holdings
Q2 ending March 31. Reported May 12.
From a tariff perspective, our exposure to incremental costs is limited to approximately 20% of our cost of goods sold, including approximately 10% of cost of goods tied to China and the rest mainly coming from Western Europe. Denise Paulonis - President and CEO
In addition to having limited exposure, we also have levers to pull that will enable us to maintain our healthy gross margin profile. This includes the combination of cost sharing with vendors and price increases in the coming quarters and sourcing optimization in the medium to long-term. Denise Paulonis - President and CEO
Nothing like waking up this morning with some new news. We’re hopeful that with the news that came out this morning [US lowering tariffs on China] with some news from the UK last week as well, that we’ll start to get a little bit more clarity and consumers will feel less uncertainty in terms of what their behaviors and their habits will be able to be. That’s what we’ll be watching for. The hope will be those things settle down a bit. Denise Paulonis - President and CEO
Walmart
Q1 ending April 30. Reported May 15
I want to thank President Trump and Secretary Bessent for the progress made recently. We’re hopeful that it leads to a longer term agreement between The US and China that would result in even lower tariffs. We will do our best to keep our prices as low as possible. But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins. In retail, managing inventory is always important. Doug McMillan, CEO, Walmart
All of the tariffs create cost pressure for us, but the larger tariffs on China have the biggest impact. The cost pressure from all the tariff impacted markets started in late April, and it accelerated in May. Let me describe how we think about that and what we’re doing about it. First, we want to keep our food and consumables prices as low as we can. Food prices in The US have gone up in recent years, and our customers have been feeling that all along. Doug McMillan, CEO, Walmart
We won’t let tariff related cost pressure on some general merchandise items put pressure on food prices. But as it relates to food, tariffs on countries like Costa Rica, Peru, and Colombia are pressuring imported items like bananas, avocados, coffee, and roses. We’ll do our best to control what we can control in order to keep food prices as low as possible. An example would be controlling the amount of fresh food waste. In some cases, we’re holding our retails where they are despite the tariff cost pressure. Doug McMillan, CEO, Walmart
We also have suppliers shifting materials from tariff impacted components like aluminum to fiberglass, where there is no tariff. Our merchants, sourcing team, and suppliers are being creative. Doug McMillan, CEO, Walmart
Brands
On Holding
Q1 ending March 31. Reported May 12
We are in the position to increase prices, and we will do this. So in the normal course of our business, starting with the fall/winter season in July, we will initiate a pricing round in the US on selected styles in order to really differentiate our products even more from our competitors on the premium position. This really puts the print in a unique position and where we think we can thrive even more from a position of strength. And at the same time, of course, that also helps us to mitigate some of the tariff impacts that we are seeing and that are embedded. Caspar Coppetti - Executive Co-Chairman & Co-Founder
Under Armour
Q1 ending March 31. Reported May 13.
We are proactively evaluating a range of mitigation strategies. This includes exploring potential cost sharing initiatives with key partners, diversifying our sourcing footprint to minimize exposure to affected regions where feasible, and examining targeted price adjustments to protect margins in areas with unique pricing power. Dave Bergman – CFO
Approximately 30% of our volume is sourced from Vietnam, 20% from Jordan, and 15% from Indonesia. The remaining third is strategically diversified across a number of other countries, each representing a low to mid-single-digit percentage. This deliberate diversification creates a well-balanced portfolio, reducing reliance on any single market and enhancing our ability to navigate geopolitical, costs, and supply chain complexities from a position of strength. Dave Bergman – CFO
We're managing [inventory] this year pretty tightly as we get into fiscal '26 and a little bit of the uncertainties around demand with the current tariff environment. So we're being pretty tight with that, managing the POs. We do expect that wherever demand ultimately develops through the year that we'll be able to manage inventory within a pretty tight range to that. Obviously, the cost per unit is going to be going up, by how much we're not sure as obviously with each announcement, that seems to change a little bit. Dave Bergman – CFO
Fossil Group
Q1 ending April 5. Reported May 14
Even if tariff rates ultimately fell between 30% to 145% on goods from China and 10% on products from other countries, we're confident that we can mitigate the full impact of tariffs to our 2025 outlook. Randy Greben – CFO
First and foremost, we are a global company with more than 60% of our revenue generated outside of the United States. This provides us with a level of insulation that we will leverage as we continue to lean into countries where we have a strong presence and growing business momentum, placing less reliance on our tariff-impacted domestic business. Randy Greben – CFO
In addition to having a large and diverse revenue stream, we have long established vendor partner relationships, in many cases, formed over decades, both in China and around the globe. We are leaning into those relationships and have already seen partners willing to participate in sharing some of the cost impact of the incremental tariffs. Randy Greben – CFO
We also have a supply chain that has built-in redundancy, providing us with the agility to reallocate manufacturing quickly and seamlessly as needed. While reducing costs and leveraging our global revenue stream are key advantages, they are not our only levers. We have also made the strategic decision to increase prices later in Q2 and into Q3. Our approach is highly surgical and will vary by brand and by category, providing us with another means to protect the gross margin progress we've demonstrated over the last two quarters.
We are evaluating opportunities to lessen and in some categories, completely removed the portion of our production that occur in China. In fact, we've already begun to mobilize on this front in certain key areas of the business.
The Clorox Company
Q3 ending March 31. Reported May 5
As tariffs came out, we saw consumers actually changing their wallet much more broadly, well beyond the market basket that includes our goods. So we saw things like people buying more automobiles, people buying iPhones. The wallet was changing pretty dramatically, and what we saw was conserving behavior in many of our categories. Linda Rendle - Chair and CEO
Most of it [tariff impact] is packaging and raw supply the finished goods. And then we did mention inventories -- some import coming from Canada and Mexico and the U.S., it's relatively small. And we do have some exports to Canada as well, but again, it's a fairly small amount of the total product supplied in the country. - Luc Bellet – CFO
Stay tuned for more quotes on tariffs. Part 5 will go out May 25 .
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Thanks!
- Cathy
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