Williams-Sonoma CEO Preemptively Mitigates Tariff Risks
In anticipation of potential tariff escalations, Williams-Sonoma (WSM) has proactively reduced its reliance on Chinese sourcing by 50%.
According to CEO Laura Alber, the home goods retailer currently procures 25% of its products from China, with the majority (81%) sourced from Asia and Europe. The company is actively diversifying its production locations to minimize exposure to tariffs.
"We're not waiting for the next wave of tariffs," Alber stated. "We've been shifting our sourcing elsewhere, including other Asian countries and the United States."
The furniture industry is particularly vulnerable to tariffs, as a significant portion of imports originate from low-cost Chinese suppliers.
Alber emphasized the potential impact of tariffs on pricing, noting that they may force the company to increase consumer costs. "Tariffs make it challenging to maintain affordable prices," she said. "We have never benefited from high tariffs."
Despite the tariff threat, furniture stocks have generally performed well. WSM shares have gained 30% in the past three months, while LZB has risen by 8%. However, ETD has declined by 6%.
Alber expressed confidence in the company's ability to mitigate tariff risks through collaboration with suppliers and product engineering.
The situation remains uncertain, with the potential for tariffs on all imports. Analysts advise caution for industries with high China exposure, including toys, home furnishings, and electronics, while sectors with lower exposure and higher pricing power, such as home improvement and grocery, may be less impacted.