Steve Madden Plans to Reduce Imports From China, CEO Says

The CEO of footwear company Steve Madden expects to reduce its imports from China and increase sourcing from other regions to hedge against proposed punitive tariffs on China by President-elect Donald Trump.

"We have been planning for a potential scenario in which we would have to move goods out of China more quickly. We've worked hard over a multiyear period to develop our factory base and our sourcing capability in alternative countries like Cambodia, Vietnam, Mexico, Brazil, etc.," Edward Rosenfeld said on a third-quarter 2024 earnings call with investors Nov. 7. Trump floated the prospect of a 60% tariff on Chinese goods during his reelection campaign (see 2410240041).

"As of yesterday morning, we are putting that plan into motion, and you should expect to see the percentage of goods that we source from China to begin to come down more rapidly going forward," Rosenfeld said.

U.S. imports constitute about two-thirds of Steve Madden's overall business, with more than 70% of that coming from China, he said, and the plan over the next year is to reduce the percentage of goods sourced from China by approximately 40% tp 45%, so that "a year from today, we would be looking at just over a quarter of our business that would be subject to potential tariffs on Chinese goods."

Rosenfeld was uncertain about what the gross margin impact would be on Steve Madden's goods, including whether the footwear company would be able to pass any costs to customers.

"It's really difficult to quantify the potential impact here, especially if we are contemplating a new policy where there are significant tariffs on China that are going to have all sorts of wide-ranging implications not only on the supply chain, but the overall economy. ... So I think it's a little too early to speculate about what the impact will be."