Dive Brief:
- Williams-Sonoma is prepared to take action if the U.S. levies new tariffs on China imports, CFO Jeff Howie said in a Q3 earnings call.
- The home products retailer is prepared to reduce its exports to China if tariffs increase and has mapped out a category-by-category plan to reduce sourcing from the country as well, the CFO said.
- The company is evaluating the impact from additional tariffs. “We have a wide range of mitigation options. In fact, everything is on the table. We'll probably move some things to other countries. We may at some point in [2025] front load some goods,” Howie told analysts.
Dive Insight:
Williams-Sonoma has been whittling down its reliance on China for years when tariffs impacted its freight costs. In 2020, the company said it was going to reduce the production it does in China by 50% by the end of the year back then.
The home products retailer reported further progress on that front Wednesday, reducing China-sourced goods from 50% to 25% over the last few years, Howie said.
One competitive advantage for the company is its vertically integrated supply chain, Howie said.
“Ninety percent of the products we sell are proprietary design and exclusively made for our brands," Howie said. "We operate our own in-house, best-in-class global sourcing operation with 12 overseas offices, it’s our own boots on the ground managing sourcing decisions, production and shipping."
Howie added that Williams-Sonoma is the 11th-largest container importer in the U.S., providing the company with scale and relationships that others don't have.
“Punch line being as the tariff landscape changes, we have the scale and strategy to pivot,” he added.
Another supporting lever is that the U.S. is already a major manufacturing hub for Williams-Sonoma.
The company’s upholstery is manufactured at its facilities in North Carolina and Mississippi. Lighting from Rejuvenation, a home improvement company owned by Williams-Sonoma, is manufactured in Oregon.
Williams-Sonoma is not alone in considering how potential tariffs will impact its supply chain operations during the second Trump administration. Other companies like Home Depot, Steve Madden, Yeti and e.l.f. Beauty have all mentioned in earnings calls how they plan to respond to future tariffs.
E.l.f. Beauty also saw impact from tariffs back in 2019 with about 99% of its products being sourced from China. The percentage has now been reduced to 80%, SVP and CFO Mandy Fields said in a Nov. 6 earnings call.
