Williams-Sonoma CEO Prepares for Potential Tariffs by Diversifying Supply Chain
Davos, Switzerland - Williams-Sonoma (WSM) CEO Laura Alber has taken proactive measures to mitigate the impact of potential tariffs on the retailer's operations.
In response to the Trump administration's previous tariffs, Alber reduced the company's reliance on China for sourcing by 50%, bringing it down to 25%. Alber emphasized that Williams-Sonoma is actively exploring alternative sourcing options, both within Asia and the United States.
"We've been working to continue to move our product elsewhere," said Alber. "So whether it's elsewhere in Asia or even in the United States. Most of our upholstery furniture is made in Mississippi or North Carolina."
The furniture industry is vulnerable to tariffs due to its reliance on low-cost Chinese manufacturers. Williams-Sonoma acknowledges that tariffs could necessitate price increases, potentially dampening consumer demand. However, the company is collaborating with vendors to mitigate these costs and maintain competitive pricing.
Despite the threat of tariffs, the furniture industry has largely remained resilient. Williams-Sonoma shares have risen 30% in the past three months, while La-Z-Boy (LZB) has gained 8%. Ethan Allen (ETD) is the exception, with a 6% decline.
Analysts suggest that the home improvement and grocery sectors may be less vulnerable to tariffs due to lower Chinese exposure and greater pricing flexibility. However, sectors such as toys, home furnishings, and electronics could face significant risks.
As the threat of tariffs remains uncertain, Williams-Sonoma remains vigilant in diversifying its supply chain and working with vendors to minimize the impact on its business.