RH Responds To Tariff Proposals

Responding to the latest round of tariff proposals, Restoration Hardware (RH) recently provided what it called clarification in response to inaccurate reports regarding the percentage of the company’s product sourced from China.

The company said it expects to source approximately 35% of its product from China in fiscal 2018, and that imports from China will be approximately 25% to 30% in fiscal 2019. In fiscal 2017, approximately 40% of RH product was sourced from China.

The Office of U.S. Trade Representative announced in July a proposed 10% duty on a subset of products imported from China, inclusive of various furniture and lighting product categories. RH has evaluated the supplemental list issued by the U.S. Trade Representative and believes that a significant subset of the company’s furniture and lighting sourced from China would be impacted by the proposed tariff.

RH said it believes that it can mitigate the impact of the proposed 10% tariff on its business to the point that there would be an immaterial impact on its fiscal 2018 and 2019 financial results. As a significant source of volume for its vendor partners, RH asserted that it believes that its vendor partners would work collaboratively with the company in an attempt to neutralize the potential tariff as well as potentially evaluate sourcing alternatives. In addition, due to the company’s differentiated product offering and scale in the luxury home furnishing market, RH said it is well positioned to make pricing adjustments if necessary.

Pier 1 Imports and At Home also recently assessed the tariff proposals on their businesses.