As tariffs imposed last month by President Donald Trump continue to bear down on the global market, Glendale-based shoe company
Weyco Group Inc., which sources the majority of its products from China, is working to "radically reorganize" its supply chain and do business with suppliers in other countries.
Efforts to diversify its sourcing is one measure Weyco Group is taking to reduce the future impact of incremental tariffs, explained CEO
Tom Florsheim Jr. during the company's first quarter earnings call Wednesday.
The company, which designs, markets and distributes primarily men’s footwear under a number of brands, says its first quarter performance was not impacted by what's now a 161% current effective total tariff rate on goods sourced from China but warned that tariffs, if not scaled back, will "significantly increase our cost of goods sold in future periods."
To mitigate the impact of tariff-cost increases, Weyco Group has negotiated cost reductions with several of its Chinese suppliers and is planning to raise selling prices beginning this summer. Ahead of the tariff effective date, the company stocked its local distribution center with excess inventory, which has allowed it to take a pause on importing products from China. Florsheim said current inventory levels will last through part of the third quarter.
In the meantime, the company is continuing its production in China and shipping those shoes to a distribution center in Montreal, Canada, where they will be stored until the tariffs recede.
"As soon as things thaw, which we don't know but we're hoping happens over the next couple months, we're going to be in a position to bring inventory into Milwaukee, our main distribution center, within a week," said Florsheim.
With plans to completely reorder its supply chain over the next 12 months, Florsheim said, Weyco Group plans to start receiving orders as soon as this fall from countries outside of China, including Cambodia, Vietnam and India, where it already has done some business.
"We feel that we can move fairly quickly, mindful of not sacrificing the quality of our product," he said.
Weyco Group reported first quarter net sales of $68 million, down 5% compared to $71.6 million in Q1 of 2024. Net earnings were also down 17% to $5.5 million.
More articles about tariffs:
