The tariffs announced April 2 are steeper and broader than expected and affect almost every apparel and footwear retailer. Nearly all manufacturing is abroad, mostly in Asia, according to Wells Fargo analysts led by Ike Boruchow, who calculate that tariffs on softline goods like apparel rose from just under 7% to over 37% on a weighted basis. “This puts all 2025 guidance at risk,” they said.
Brands and retailers couldn’t really devise strategies until the policy was announced, and most were likely caught off guard, William Blair analysts led by Dylan Carden said. Especially hard hit are brands like On, Lululemon, Deckers and Gap Inc.’s labels that switched manufacturing to Vietnam, according to Evercore ISI analysts led by Michael Binetti.
Off-price retailers, because they offer value and often source domestically, are sheltered somewhat, according to Jefferies analysts led by Corey Tarlowe. “However, even Off-Price can be subjected to pressures from higher prices,” they said.
