IRobot Q3 Sales Fall on Tariff-Forced Price Hikes Cutting Sales; Stock Down

IRobot U.S. sales declined 7 percent in Q3 because growth “remained subdued as the direct and indirect impacts” of the 25 percent List 3 U.S. tariffs on China “weighed heavily on consumers, retailers and suppliers,” said CEO Colin Angle on a Wednesday call. Tariffs forced iRobot to hike prices July 22 that resulted in “suboptimal sell-through” in August and September, he said. Sales recovered after the vendor "rolled back" pricing to “pre-tariff levels” in October, he said. The company regards these duties as “a short-term phenomenon that has temporarily stunted top-line growth and eroded profitability,” said Angle. “We plan to continue to limit our China exposure by moving production to Malaysia.” IRobot will have one Malaysian production line “operating at scale” for entry-level products by Jan. 1, said Angle. It will continue seeking “ways to move higher-complexity products outside of China, depending on what we’re seeing relative to the tariff situation,” he said. “Malaysia is playing a growing part of our strategy. We’re not holding our breath and waiting for tariffs to end or to be exempted.” The vendor filed for a tariff exclusion July 1 on the "retail-packaged robotic vacuum cleaners" it imports from China. It remains locked in a “Stage 2 -- Initial Substantive Review" hold at the Office of the U.S. Trade Representative. "With over 30,000 applications now awaiting review, it could take several more quarters before we learn whether our request for an exemption will be granted." USTR didn't comment. Shares closed at $49.06, down 9 percent.