Donald Trump’s sweeping tariffs on China, Mexico, and Canada have caused a lot of footwear and apparel stocks to crash. Even though the President paused tariffs on Canadian and Mexican goods for a month, the 10% tariffs on China are still in place.
Fashion brands provide an interesting investment opportunity. Due to their loyal following, they have the ability to raise prices to take care of tariffs. In a similar way, these brands have become quite agile in diversifying their supply chain since the pandemic, so sourcing products from outside China is also a possibility for many. More than these brands, it is the retailers that will get hurt as their value proposition to their customers may get hurt when brands raise prices. However, these retail stocks are not a part of our discussion for now.
In order to come up with our list of 10 stocks affected by Trump’s tariffs on China, we only considered stocks with a market cap of at least $1 billion and a product sourcing mix exposure to China of at least 5%.
10. Columbia Sportswear Company (NASDAQ:COLM)
Columbia Sportswear Company makes and sells footwear, apparel, accessories, and equipment on a global scale. It sells its products under famous names such as Columbia, SOREL, prAna, and Mountain Hard Wear. The company sources 5% of its products from China.
On its Q4 earnings call on February 4th, CEO Tim Boyle highlighted how the company finally returned to growth in the US market while continuing its already strong performance at the international level. The CEO says the company is working actively on growth drivers such as retail partnerships in the US and new product launches, like the premium Titanium product line and the Omni-MAX footwear collection.
The company has also declared a dividend of $0.3, giving it a decent dividend yield of 1.4%. While the management hasn’t identified the exact impact of the tariffs, they are likely to result in cost pressures as well as foreign exchange pressure in 2025.
9. Deckers Outdoor Corporation (NYSE:DECK)
Deckers Outdoor Corporation not only designs but also sells apparel, footwear, and accessories for both high-performance activities and casual use. Some of its popular brand names include UGG, HOKA, and the Teva brand. The company sources 5% of its products from China.
The company’s stock is down 23% since announcing its fiscal Q3 earnings. Investors were not impressed by the slowing growth, especially in domestic sales. Matters were made worse by CFO Steve Fasching’s comments on forex headwinds in 2025:
Further, though we experienced a small revenue and gross margin benefit from favorable foreign currency exchange rates in the third quarter, we have since seen rates move against us, and as a result, expect to face an FX headwind in the upcoming quarter.
The management was able to raise the fiscal 2025 revenue guidance to 15% growth from the previous 12%. This is because of the growth expected in the company’s brands UGG and HOKA, both of which are expected to grow at 10% and 24% respectively as per the management.
All of this wasn’t enough to impress market participants. The negativity was perfectly summed up by BTIG analyst Janine Stichter:
Despite what we view as best-in-class fundamentals, we note the premium valuation makes the shares susceptible to even minor disappointments.
