Ralph Lauren Faces Tariff Headwinds but Remains Resilient
Even a modest 25% tariff on Chinese goods could have a significant impact on iconic retailer Ralph Lauren (RL). However, CEO Patrice Louvet expressed confidence in the company's ability to adapt.
Louvet acknowledged that China remains a critical source for certain sophisticated products, but emphasized the company's diversification strategy. Ralph Lauren has reduced its reliance on China from 50% to a mid-single-digit percentage.
While acknowledging potential price increases for consumers, Louvet highlighted the company's focus on delivering exceptional customer experiences and its commitment to exploring alternative sourcing options to mitigate tariff risks.
Despite concerns about tariffs, apparel company stocks have performed well in recent months. Ralph Lauren, North Face parent VF Corp. (VFC), Skechers (SKX), and Uggs maker Decker's Outdoor (DECK) have all gained double-digit percentages in the past three months.
"We are not obsessed with tariffs. We are obsessed with our consumer," said Louvet.
Analysts note that the impact of tariffs on apparel companies will depend on a number of factors, including the percentage increase, the specific products affected, and the ability of companies to adjust their sourcing and pricing strategies.