(Reuters) - A host of U.S. consumer companies have warned that costs related to tariffs on goods imported from China will hit their profits.
The United States increased tariffs on $200 billion (£159 billion) worth of Chinese goods to 25% from 10% in May.
President Donald Trump has also threatened an additional round of tariffs on $300 billion worth of goods that would cover nearly everything imported from China to the United States.
BEST BUY CO INC: “The impact of tariffs at 25% (proposed to be enacted) will result in price increases and will be felt by U.S. consumers,” CEO Hubert Joly said.
HOME DEPOT INC: If the latest round of tariffs hold, it would increase annual cost of goods sold by $1 billion, on top of a $1 billion hit that the home improvement chain has taken from tariffs imposed in 2018.
The impact from new tariffs would still be manageable as it would make up less than 1% of total sales, said Edward Decker, executive vice president of merchandising.
J.C. PENNEY CO INC: “We do anticipate a more meaningful impact on both our private and national brands if the potential fourth tranche of tariffs does go into effect,” CEO Jill Soltau said.
KOHL’S CORP: Tariffs will primarily hit China-sourced merchandise in home and accessories business but apparel and footwear are not impacted at this point.
The department store chain said about 20% of its merchandise is sourced from China.
WALMART INC: “Higher tariffs will lead to higher prices for customers,” CFO Brett Biggs told Reuters in an interview last week. He said the company, known for lower prices, will try to minimize the effect of the levies on the company and its customers.
MACY’S INC: “The increase of the third tranche from 10% to 25% on May 10 does have some impact, particularly on our furniture business. However, the team anticipates that this can be mitigated,” CEO Jeffrey Gennette told investors on a conference call on Wednesday.
“It’s too early to comment on what we think that’s going to mean in terms of potential price increases and what categories are going to be more affected than others,” he said.
RALPH LAUREN CORP: “The tariffs enacted to date have a limited impact on our business, but our teams are prepared for multiple scenarios and have accelerated the diversification of our supply chain to mitigate the long-term impact of any potential tariff outcomes,” CFO Jane Nielsen told investors on a conference call last week.
CROCS INC: Footwear maker estimates an impact of about $5 million in 2019 assuming a 25% tariff takes effect. Co also expects the amount of U.S. product sourced from China to be below 10% for 2020, it now imports about 30%.
“Our current sourcing mix reflects our need to balance ramping up incremental supply to meet the growing demand for our product and continuing our multi-year effort to reduce our sourcing from China,” The company said in a statement.
DEL MONTE FOODS INC: “It’s not just tariffs. Transportation costs are up, labour costs are up,” CEO Greg Longstreet told Reuters at a conference in New York last week. “It’s an inflationary environment. A lot of that’s going to have to be passed on. The consumer is going to have to pay more for a lot of critical goods.”
Del Monte has already raised prices on many products, including mandarin oranges that it imports from China, and will do so again with tariffs rising, he said.
RH: The home furnishing retailer said it selectively increased prices of its products, while moving certain production and development of new products out of China and expanding manufacturing facilities in the United States to offset the impact of tariffs.
OXFORD INDUSTRIES INC: Tommy Bahama-owner said it plans to hike prices selectively.
The company is also negotiating on price reductions with factories and shifting production out of China, besides accelerating the delivery of its Fall products.
AT HOME GROUP INC: The home decor retail chain said it would not raise retail prices to offset the 25% tariff on goods like furniture, resulting in an increase in costs that would dent the company’s profit margins this year.
“With tariffs now raised to 25%, we have an even sharper focus on collaborating with our product partners to mitigate cost,” CEO Lewis Bird said.
CALERES INC: “We are actively working through contingency plans, which includes potentially shifting additional production out of China, working with our factory partners to reduce costs and exploring price increases,” CEO Diane Sullivan said.
“While we are trading these issues with the same sense of urgency we’re applying across our entire business, we are taking nothing for granted.”
AMERICAN EAGLE OUTFITTERS INC: “If tariffs are expanded to apparel, there would be an adverse effect on our financial results,” CFO Robert Madore said.
Madore said the company was working with its sourcing partners to “significantly” mitigate any potential impact from additional tariffs.
DOLLAR GENERAL CORP: The company said it expects increased tariffs to lead to higher prices even though it was working with vendors to mitigate the impact.
HUDSON’S BAY CO: The Canadian department store operator, which operates over a hundred stores in the United States, said it expects to use aggressive inventory and supply chain management to offset a potential further round of American tariffs on Chinese goods.
WINNEBAGO INDUSTRIES INC: The motorhome maker said it expected “double digits of millions of dollars or more than that of the previous tariffs combined” impact on fiscal 2020 costs from the latest tariffs and proposed duties.
La-Z-Boy Inc: The American furnishing retailer said a further rise in U.S. tariffs would lead to higher raw material costs in fiscal 2020 and may likely force it to raise prices.
The company said China accounts for almost all of its leather cut-and-sewn sets and fabrics and 25% of its casegoods (wood furniture) products.
Reporting by Nandita Bose, Siddarth Cavale, Rod Nickel, Aishwarya Venugopal and Uday Sampath Kumar; Editing by Arun Koyyur and Sriraj Kalluvila