By Katherine Hamilton

Shoe companies such as Nike, Skechers and Deckers are taking a hit after President Trump's announcement of higher tariffs on the countries where these companies make most of their products.

Trump imposed a 46% tariff on Vietnam, a 49% levy on Cambodia and 32% on Indonesia. Shoe brands make an outsized portion of their products in those countries, and some have increased their footprints there to divert more of the supply chain away from China. The tariffs will likely push costs higher, analysts said, pressuring companies to balance profit hits with raising of consumer prices amid heightened uncertainty.

Skechers slipped 22% to $46.15 in morning trading Thursday, while Crocs shed 17% to $92.88. Nike's stock was down 13% to $56.50 and Deckers fell 17% to $98.01.

Skechers sources about 40% of its shoes from Vietnam, while Nike manufactures roughly half of its footwear in Vietnam and just 18% in China, according to data compiled by Raymond James analyst Rick Patel. On Running sources around 90% from Vietnam, and Crocs about half.

Skechers and Deckers had previously said they were moving some manufacturing to other countries outside of China to avoid the 25% tariff on Chinese imports. But that mitigation will no longer cut costs because of new duties on those other countries.

Companies that get revenue from a wider range of countries are in better shape to deal with tariffs, Stifel analyst Jim Duffy said. Birkenstock, whose shares dropped 8.2% to $43.33, is better insulated due to its diverse set of revenue streams around the globe, as well as wider margins. Steve Madden, whose stock fell 16% to $23.63, is at greater risk because it's more concentrated in the U.S. and has narrower margins.

The bottom line is that many companies will have to pass higher costs to consumers by raising prices, Duffy said. That is especially risky as consumer confidence is at a four-year low and many Americans are still worn out on discretionary spending after years of inflation.

Skechers has said it would raise prices to protect margins if tariffs went into effect. Retailers could lose some customers by charging more and they may not be able to bake the full cost increase into prices, potentially denting margins, analysts said.

Brands with higher-end products that target more affluent customers, such as On Running and Deckers, are more likely to be able to retain customers even with price hikes, Patel said.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

April 03, 2025 10:34 ET (14:34 GMT)

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