Warby Parker, Skechers, Crocs: Tariff Exposure and Mitigation Strategies

As the U.S.-China trade war continues to unfold, apparel brands are grappling with the impact of tariffs on their supply chains and pricing strategies. Warby Parker, Skechers, and Crocs are among the brands most exposed to tariffs, but they are also implementing diversification strategies to mitigate the risks associated with geopolitical uncertainties.



Warby Parker, the eyewear retailer, has reduced its reliance on China, with the region now accounting for 20% of its cost of goods sold. However, the company is still exposed to tariffs, which could lead to increased production costs and higher prices for consumers. Warby Parker has not explicitly stated how tariffs would affect its pricing strategy, but it has mentioned that it is evaluating mitigation efforts to lessen the impact on its business.

Skechers, the footwear brand, has a more significant exposure to China, with the region accounting for 35% of its manufacturing in 2023. This exposure results in estimated additional costs of $42.3 million due to tariffs. The company has stated that it expects its domestic wholesale business to see some impact from tariffs, but it is implementing mitigation efforts to lessen the impact. Skechers has mentioned that it will absorb certain elements of the increase in the short term to the benefit of its customers, suggesting that it may not pass on the full cost of tariffs to consumers.

Crocs, the footwear brand, currently imports approximately 30% of its U.S. product from China. Assuming a 25% tariff takes effect, the company estimates the 2019 impact at approximately $5 million. Crocs has a globally diversified sourcing base and is ramping up incremental supply to meet growing demand while continuing to reduce its sourcing from China. The company has not explicitly stated how tariffs would affect its pricing strategy, but it has mentioned that it is evaluating various mitigation initiatives to lessen the impact on Crocs.

In conclusion, Warby Parker, Skechers, and Crocs are among the apparel brands most exposed to tariffs, but they are also implementing diversification strategies to mitigate the risks associated with geopolitical uncertainties. By expanding into new markets and product lines, these brands can better navigate challenges and maintain their competitive edge. However, the extent of the impact of tariffs on these brands will depend on the duration and severity of the tariffs, as well as their ability to adapt to the new environment.