Dive Brief:
- Ralph Lauren is proactively developing and scaling new supply chain capabilities to mitigate potential risks, including higher tariffs, according to a Nov. 7 earnings call.
- The fashion brand has diversified its sourcing footprint over the past seven-plus years, developing alternate production for key product categories and boosting production closer to the U.S., President and CEO Patrice Louvet told analysts.
- “Our global sourcing and supply chain is agile and well-positioned,” Louvet said. “We have strong partnerships around the world and that’s really served us well and been a key differentiator for us through the pandemic and beyond.”
Dive Insight:
Ralph Lauren has manufacturing facilities on five continents, with a high concentration in China, Vietnam, India, Italy and Cambodia, according to the website’s factory disclosure list. Such factories provide raw material processing, printing, dyeing, textile production and final product assembly.
Products from China, however, currently represent roughly a “high single-digit percentage” of the company’s globally sourced units, Louvet said.
During his reelection campaign, President-elect Donald Trump proposed tariff hikes for many imports, including particularly elevated duties on China-made goods. The intended raises would build on the slew of heightened tariffs recently finalized by the Biden-Harris administration.
Ralph Lauren will “wait and see what, if any, future policy ultimately gets passed,” its CEO said. “But we’ve navigated tariffs successfully before, including not so long ago.”
Other companies are mixing up their sourcing strategies in advance of expected tariff increases.
Steve Madden noted during a recent earnings call that the company is reducing its sourcing reliance on China, with plans to slash imports from the country by up to 45% by the end of 2025.
Adidas has also made efforts to stop procuring U.S. goods from China. Although the shift isn’t necessarily tied to tariffs, CEO of Global Brands Bjørn Gulden said the company is in good shape if they increase.
