Footwear Insight

2025 Outlook trust is paramount, as is continuing to deliver uncompromising quality and value. And if we're passing along costs, we need to give consumers greater per- ceived value, always demonstrating that our focus remains firmly on their needs." Vendors Hoping for Minimal Disruption Chris Hufnagel, president and CEO of Wolverine World Wide, the parent of Merrell, Saucony and a number of other footwear brands, said on its Nov.-9 analyst call that Wolverine had reduced the amount of product sourced from China from 40 percent in 2009 to the mid-teens currently. He said, "As we hear more, we'll obviously contemplate things that we need to go do to make sure we can protect and see to grow the business." Skechers' CFO John Vandemore said on an analyst call earlier this year that Skechers' sourcing network is largely split between China and Vietnam with each country representing in the "40-ish percent range." e brand also does a "pretty significant business" selling into China that wouldn't be affected by tariffs on U.S. imports. He said Skechers continues to look for opportunities to diversify its produc- tion, partnering with factories in India, Indonesia, Turkey, Mexico and elsewhere. However, he still said it's challenging to deal with trade uncertainties. "I think the one thing that we've learned is you can't really react to hypotheticals, but you need to be very quick to react to actual results, Vandemore said. "And so, we'll be poised to react should we need to, although I would note again, it's going to be limited by that footprint. And I'd say the footprint of the footwear industry and apparel industry as a whole." Vandemore added that competitors will be feeling the same pressures. He elaborated, "Our anticipation is you're going to have to see quite a bit of adjustment across the industry, not just with one brand or another." Silver Linings One side benefit from the tariff threat, notes FDRA's Priest, has been increasing awareness around the impact of tariffs. A post-election survey of 2,000 voters commissioned by the FDRA found 74 percent of Republicans and 53 percent of all Americans support tariffs on com- puter chips or products vital to national security, but a solid majority, including Republicans, oppose raising tariffs on essential household items as well as kids' shoes and running/walking shoes. Priest said the sur vey shows Americans "understand they are the ones who ultimately bear the cost" of tariffs. He hopes any tariff action from the incoming Trump administration avoids consumer goods as other sur- veys show consumers continue to face inflation fatigue. Lamar hopes a deeper exploration of trade leads to stronger, long-term trade agreements and trade preference programs solidified with other regions, including renewal of the soon-to-ex- pire African Growth and Opportunity Act (AGOA) and Haiti HELP/HOPE programs as well as the long-expired Generalized System of Preferences (GSP) program. He also said the incoming Trump administration may be more open than the current administration to initiat- ing new trade agreements, noting that Trump signed the US-Mexico-Canada Agreement (USMCA) that updated the NAFTA agreement. "If tariffs continue to be widely or loosely threatened, as they have been, trade policy only becomes more cha- otic, which hurts American consumers and U.S jobs and competitiveness," said Lamar. "ey could also undermine some of the accomplishments – such as USMCA, which is a significant source of leather footwear – that former President Trump achieved in his first term." n footwearinsight.com THE BUSINESS OF SELLING SHOES Q4 2024/JAN 6, 2025 AD CLOSE: DEC 23, 2024 FDOOTWEARINSIGHT.COM FOOTWEAR INSIGHT ® BUSINESS REPORT QUARTERLY IN EVERY ISSUE 14 RETAILERS / 18 BRANDS THE FI INDEX TRACKING 32 OF THE MOST IMPORTANT PUBLICLY TRADED COMPANIES THAT HAVE A SUBSTANTIAL FOOTWEAR BUSINESS. BY THE NUMBERS RESULTS ROUND-UP WHAT'S HOT / WHAT'S EMERGING THE QUARTERLY INTERVIEW INVENTORY MATTERS RETAIL THEATER Q4 24

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