Dive Brief:
- Williams-Sonoma plans to share some of the proceeds of the roughly $200 million in refunds it has received for defunct tariffs with vendors and employees, according to its Q2 earnings report published Wednesday.
- Although the kitchenware and home goods retailer recognized the bulk of the $200 million refund as a reduction in cost of goods sold, it said it would use $47.5 million to reimburse vendor partners for discounts they provided to mitigate International Emergency Economic Powers Act tariffs. The company also said it would allocate $10 million toward a one-time contribution to some employees’ 401(k) accounts “in recognition of their efforts navigating the IEEPA tariffs.”
- “We're so appreciative to have the money back and to be able to reward our employees with part of it,” President and CEO Laura Alber said on an earnings call Wednesday. “They have done such an amazing job.”
Dive Insight:
As Customs and Border Protection continues to pay out refunds for the IEEPA tariffs the Supreme Court struck down in February, companies across numerous sectors have taken a wide variety of approaches to using the returns.
Some companies have focused on using the money to benefit customers. For example, Amazon said it would issue refunds to shoppers in “a limited set of circumstances,” while Walmart and BJ’s Wholesale Club are investing in price cuts. Elsewhere, companies such as Nintendo have been adamant that tariff refunds are not owed to customers.
Meanwhile, other tactics for using tariff refunds have included offsetting increased logistics and sourcing costs, selling refund rights for quick cash, and sharing reimbursement benefits with supplier partners.
Through its multi-pronged approach, Williams-Sonoma has joined the camp sharing refunds with vendors, something Alber said was “the right thing to do.”
“They gave us discounts and when we got the money back, we gave them their money back,” the CEO said. “And that is a big deal that I think is going to really just continue to further solidify the special partnership we have with them versus our competitors.”
But Williams-Sonoma’s decision to reward employees with some of the returned money is a more unique approach.
“It was a very chaotic year moving products all over the world and trying to resource them and teams did a great job also in supply chain, offsetting some of these costs that the tariffs forced upon us,” Alber said.
Alber added that the company may consider investing refunds in other parts of the business as well.
“We love cash. So why not have some more? And who knows, we may decide to do something,” she said.
Williams-Sonoma, which was pessimistic about potential IEEPA tariff refunds earlier this year, noted that it had recouped “substantially all” of the returns it has filed for, as of Aug. 2. However, it still expects to receive another $3.2 million.
