U.S.-based Oxo Pop and Osprey parent company Helen of Troy is working with suppliers to move production to areas outside of China — albeit still in Asia — in a bid to diversify its supply base and reduce potential exposure to tariffs, accord to a July 9 earnings call.
The Trump administration initially implemented several tariffs on China imports in 2018 that impacted a variety of industries, especially the apparel sector. Earlier this year, the Biden administration revealed plans for additional tariff increases on China-made goods. While the move was not unexpected, the tariffs are expected to have a significant impact on multiple industries.
"With respect to tariffs, I would say, look, there's no way to perfectly protect ourselves. We manufacture about 79% of our goods in Asia and about 15% of that is outside of China. And so the difference there is what we would be dealing with respect to tariff exposure,” Helen of Troy CFO Brian Grass said during the earnings call.
In 2023, the company relocated some of its Hydro Flask bottle production to the Western Hemisphere.The company has also pursued a “strategic initiative” to pursue sourcing in North America but noted that the move hasn’t been as successful as its other diversification endeavors, Grass told analysts.
Moving to parts of Asia outside China has been a more successful strategy for Helen of Troy — one it expects to keep leaning into, the CFO said. He further noted that there are “several more projects underway to move production [to other areas in Asia].”
Geopolitical risk has been identified as a major driver for shifting sourcing efforts, Michael Yee, CEO of MGF Sourcing, said at the American Apparel & Footwear Association’s summit in March. Many companies have been adapting ther strategies to address such risks.
Barbie’s parent company, Mattel, for instance, shuttered one of its Tier 1 supplier plants in China in a bid to diversify its manufacturing footprint. Currently, 50% of Mattel’s products are made in China, but that number is currently on the decline.
Retailer Destination XL also moved sourcing away from China to avoid the use of Uyghur forced labor in the Xinjiang region.
