Businesses in the United States are beginning to feel and respond to the effects of the Trump Administration tariffs, retailers included.
Pier 1 has issued a statement about the 10% tariffs levied on additional classes of products imported to the U.S. from China announced by the Office of the United States Trade Representative on July 10. Pier 1 pointed out that it expects about 59% of its fiscal 2019 net sales to come from merchandise produced in China. The company anticipates that approximately half of that merchandise produced in China would come from product classes subject to the proposed tariff.
Pier 1 stated that it is evaluating strategies to mitigate the impact of the proposed tariff, including collaborative efforts with its vendor partners, and does not expect a material effect on financial results in fiscal 2019, although it added that no assurance exists about how the final trade negotiations will resolve and what their impact will be.
For its part, At Home issued a statement saying that it evaluated the list of product categories potentially subject to new tariffs released by the Office of the U.S. Trade Representative and believes that a portion of its China-sourced home furnishings and accent décor would fall within those designations.
At Home also indicated that it doesn’t believe the tariffs as proposed would have a material effect on its fiscal 2019 and 2020 financial results. At Home has an efficient and diverse supply chain, the company said, with a significant number of product partners in China, the U.S., Hong Kong, Belgium, Taiwan, India and Vietnam, as well as more recent partnerships in Turkey, Indonesia, Mexico and Malaysia. It also has established a direct sourcing function to increase from-factory purchases rather than those through agents or trading companies, noting that the initiative provides an opportunity to improve international sourcing flexibility, reduce product costs, increase supply chain diversity and broaden the company’s access to unique and quality products.
At Home said it intends to continue working with product partners and leverage its flexible supply chain and growing scale to help offset the impact of proposed tariffs while maintaining its competitive position. Additionally, with an average selling price of less than $15 and an average basket of about $65, the company maintained that, in some circumstances, it could make price adjustments without materially affecting its overall customer value proposition.