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Crocs Sees U.S. Products Sourced From China To Be Below 10% In 2020

crocs jun12 lt

Casual footwear maker Crocs, Inc. (CROX) said it expects the amount of U.S. products sourced from China to be below 10 percent for 2020 compared to 30 percent currently. This comes as a result of the threat by the U.S. government to extend current tariffs to cover footwear imports from China.

However, Corcs maintained that the tariffs will not have any material impact as it has a globally diversified sourcing base.

The company added that it estimates the 2019 impact at about $5 million, assuming a 25 percent tariff taking effect on August 1.

The footwear maker said it is taking steps with a view to mitigating the impact of "any tariffs ultimately put into effect."

The company was off to a great start in 2019, with revenues for the first quarter exceeding expectations as demand for its product continued to yield accelerated sell-through's. It had also registered five consecutive quarters of double-digit comparable sales growth.

Following the collapse of the trade negotiations between Washington and Beijing in May, US President Donald Trump has come down heavily on Chinese companies. The tariff rise could also hurt Macy's Inc., Steve Madden, Shoe Carnival Inc. and Wolverine World Wide Inc., all of whom reportedly said they would be forced to raise end prices for the consumers.

Another Chinese company which is trying to absorb the shock is telecom-equipment major Huawei Technologies. A broad ban has been imposed on federal money being used by federal agencies and contractors to purchase Huawei products. The ban will make it difficult for Huawei and other Chinese technology companies such as ZTE to do business with American companies.

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