Dive Brief:
- Rocky Brands has “ample time” to transition production away from China thanks to its efforts to frontload inventory ahead of tariff hikes from the U.S. in April, COO and CFO Tom Robertson said on an April 29 earnings call.
- The footwear company will use its six-to-seven-month inventory buffer to shift manufacturing to its own facilities in the Dominican Republic and Puerto Rico, as well as to countries like Vietnam, India and Cambodia, Robertson said.
- Robertson said Rocky Brands plans to manufacture less than 20% of its volume in China by the end of the year, per the call. In 2024, about 50% of its footwear was manufactured in China at its own facility in Suzhou, or by third party suppliers, Robertson said in February.
Dive Insight:
Many shippers are looking to diversify their production footprints away from China to mitigate the impact of 145% tariffs on imports from the country.
For instance, drinkware company Yeti plans to shift 80% of its production out of the country by the end of the year. Similarly, toy and game company Hasbro aims to procure less than 40% of its goods from China by 2026.
Rocky Brands, which owns brands like The Original Muck Boot Co. and Georgia Boot, will ramp up production at its facility in the Dominican Republic, where it has been making boots for over 40 years, said Robertson. Despite a 10% tariff on goods from the Dominican Republic, the duty is “nothing” compared to those levied on China, he added.
“We're going to continue to leverage that asset for us this year, as well as our Puerto Rican facility, as it's going to be a much more meaningful asset given the dynamic that's going on in the world right now,” the CFO said.
Like Rocky Brands, many shippers have also been frontloading inventory, a popular tactic to navigate logistics hurdles, as a hedge against rising tariffs.
But in some cases, Rocky Brands has “methodically” paused or slowed certain shipments from China based on consumer and retailer needs, CEO Jason Brooks said on the April earnings call. The footwear company can also move product made in China around its global network, redirecting it away from the U.S. to other countries.
Rocky Brands will also soon implement price increases on several footwear styles as another lever against tariffs, Robertson said. The new prices are set to go into effect in June, regardless of any potential changes made to tariffs on imports from China in the next several weeks.
Despite being in a “very good inventory position” currently, according to Robertson, Rocky Brands is still wary of potential scarcity on U.S. shelves later in the year due to abnormal inventory flows, especially ahead of the fall and holiday seasons.
“So, it'll be interesting to see how that plays out,” Robertson said. “I do think that we are in a competitive advantage situation.
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