Dive Brief:
- Sportswear retailer Academy Sports and Outdoors has cut down on the percentage of goods it sources from China, saying that lessening the company’s reliance on a single country “best positions” the business for the years ahead, CFO Carl Ford said during a Dec. 10 earnings call.
- The CFO told analysts that the company currently procures 50% of its inventory from China, compared with more than 70% in 2019. He added that the company has no exposure to Mexico or Canada.
- “This translates to approximately 10% of exposure to potential elevated tariffs on which we are the importer of record,” Ford said. “We will continue this diversification strategy moving forward and continue to look for ways to further mitigate any risk.”
Dive Insight:
Academy Sports and Outdoors has been proactive about diversifying its sourcing footprint to “reduce our direct import exposure from a single country,” said Ford.
The retailer has also accelerated some spring receipts to transport goods ahead of the Lunar New Year after pivoting shipments to the West Coast to avoid possible delays from last fall’s East Coast port labor disputes. While the October strike between the International Longshoremen’s Association and the United States Maritime Alliance was short-lived, industries are still navigating the event’s impact and preparing for the possibility of another strike as a Jan. 15 negotiation deadline approaches.
“This should have a two-fold benefit, in that it could help avoid any increase in tariffs, while at the same time avoiding key elements of our spring set getting caught up in a potential East Coast ports strike,” the CFO told analysts.
Academy Sports and Outdoors is one of many companies monitoring potential changes to trade policy and corporate taxes ahead of the next presidential administration. Last month, the Biden administration announced plans to increase Section 301 tariffs on wafers and polysilicon imports from China. The increases build on tariff hikes finalized by the administration in September.
Ford noted that the national brands Academy partners with have been on a “similar journey” to expand their sourcing bases in order to limit exposure to possible tariff-related price increases.
The CFO added that the firearms and ammunition sector is an exception to this shift, as a “large portion” of those goods are manufactured domestically, which could “help insulate this important category from price disruptions.”
Academy Sports and Outdoors has focused on refining and modernizing its supply chain strategy in recent months. The retailer started off 2024 with a new chief supply chain officer, followed by a new board member in March.
The company also implemented a new warehouse management platform at a distribution facility in Georgia as it focuses on store growth and omnichannel capabilities. In June, Academy Sports and Outdoors also began offering on-demand delivery of apparel, footwear and sporting goods through DoorDash.
