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.
8. Revolve Group Inc. (NYSE:RVLV)
Revolve Group Inc. is an online fashion retailer that operates through FWRD and REVOLVE segments. It provides a curated selection of beauty, apparel, accessories, home products, and footwear. The company sources 14% of its products from China.
KeyBanc recently upgraded RVLV from Sector Weight to Overweight prior to the upcoming Q4 financial results and assigned it the target price of $37. Previously KeyBanc analyst Ashley Owens had downgraded the stock stemming from concerns over revenue stress, inventory rightsizing, and enhanced return rates. As per the recent upgrade, analysts changed their pessimistic point of view and believe that the company is well-positioned to return to steady growth revenue and increased margins at the start of the year. This change in analysts’ view comes amid expectations of margin expansion and strategic investments.
Analysts highlighted that the brokerage anticipates more strategic investments in technology aimed at improving search engine optimization and further lower return rates.
With this, we foresee continued logistics cost efficiencies, stabilized/improving AOV, as well as product mix normalization, which should drive further margin accretion.
As stated by the analyst, the company is projected to improve margins through stable average order value (AOV) and cost efficiencies. With a stock performance of over 110% gain in the previous year, the recent downturn in the share price can be taken as a buying opportunity.
7. Under Armour Inc. (NYSE:UAA)
Under Armour Inc. is a developer, marketer, and distributor of athletic performance footwear, accessories, and apparel for youth, men, and women. It supplies its products through independent distributors, wholesale channels, and e-commerce websites. The company sources 14% of its products from China.
UAA has just announced its quarterly earnings report exceeding analyst expectations. It also raised its full-year guidance amid improving demand in both Asia and North America.
One of the earnings highlights was the company’s 2.4% improvement in gross margins, which are now at 47.5%. While foreign exchange impact has helped improve these margins, management’s decision to rein in promotional activities has helped save costs. Lower freight costs also contributed to the gross margins during the quarter.
UAA may continue to receive a mixed response from investors as the company is in the midst of a transformation, switching to a category-focused operation which the management thinks will enhance its execution in some of the key categories the company operates in. Here’s what the CEO had to say about the transformation plans:
As we sharpen our focus on strengthening the Under Armour brand, our updated product strategy and enhanced marketplace discipline combined with the shift to a category-led operating model are driving our transformation.
6. V.F. Corporation (NYSE:VFC)
V.F. Corporation is a branded lifestyle footwear, accessories, and apparel designer, distributor, and marketer. The company operates in Active, Outdoor, and Work segments. It sells its products mainly to mass merchants, department stores, independently operated partnership stores, national chains, specialty stores, and direct-to-consumer platforms. The company sources 15% of its products from China.
VFC recently released its Q3 earnings report, beating analyst estimates. Financial results indicated non-GAAP EPS topped by $0.28 while revenue surpassed by $80 million. The company reported a solid YoY growth of 1.8% and showed a 56.3% gross margin expansion.
While margin expansion is a growth trend, it was partly associated with lower promotional expenses so the sustainability of this expansion is yet to be determined. The company’s cost reduction program is working as expected as SG&A (selling, general & administrative) expenses were reduced by 3% as compared to the previous year on an adjusted basis. For long-term investors, the key highlight was a 43% decline in net debt excluding operating leases. Given the strong Q3 performance and share price performance of 14% in January, now is the time for investors to consider an entry into the stock.
5. NIKE Inc. (NYSE:NKE)
NIKE Inc. is a leading developer, designer, marketer, and supplier of athletic equipment, footwear, accessories, apparel, and services. The company supplies its products to athletic specialty stores, department stores, sporting goods stores, footwear stores, and other retail accounts. The company sources 18% of its products from China.
NKE’s Q2 performance indicates that the company is undergoing a tough period. Revenue declined by 8% YoY in the Chinese market. However, this was lower than the analyst expectations of a 10% decline. Gross margins also slightly decreased to 43.6% as compared to the previous year’s same quarter at 44.6%. Despite the above challenges, here are the positives about the company: a 5% decline in operating expenses that can provide the company with a much-needed cushion to expand its marketing budget.
On top of that, the company prioritizes shareholders’ returns as the dividend was increased by 7%, with $1.1 billion spent on share buybacks. Analysts believe that the decline in Chinese market sales is recoverable. The company has constantly earned a high return of over 20% on its investments and that’s mainly because it knows how to deal with changing consumer preferences. Even though NIKE’s stock price dropped notably, with innovative products and solid brand power, it represents a rewarding long-term investment opportunity.
4. Warby Parker Inc. (NYSE:WRBY)
Warby Parker Inc. is an eyewear products provider that offers sunglasses, blue-light-filtering lenses, contact lenses, eyeglasses, light-responsive lenses, and non-prescription lenses. The company supplies its products through its websites, retail stores, and mobile apps. It sources 29% of its products from China.
Evercore ISI’s analyst Mark Mahaney downgraded the company just last month from Outperform to In-Line as he thinks the risk/reward associated with the stock is less attractive now. Analysts anticipate WRBY to profit from e-commerce gains, increased EBITDA margins, and improved customer growth over the next 1-2 years in a recovering eyewear market. Despite this, the expected pace of this recovery isn’t very attractive for shareholders.
Regardless of the challenging environment, WRBY’s growth drivers remain solid and the management did a good job. With the company’s stock price gaining over 100% in the past year and analysts’ expectations about the gradual recovery, the company presents an attractive long-term investment opportunity.
3. Crocs Inc. (NASDAQ:CROX)
Crocs Inc. is a casual lifestyle accessories and footwear developer, manufacturer, designer, marketer, and seller under HEYDUDE and Crocs brands. It offers a variety of footwear products including slides, boots, sandals, sneakers, clogs, flip-flops, and other products. The company sells its products through e-commerce sites, store-in-store locations, wholesalers, third-party marketplace, and retail stores. The company sources 28% of its products from China.
CROX is down nearly 30% since reporting its Q3 earnings. Even though the company beat estimates on both revenue and EPS, it was the Q4 guidance that rattled investors. The lowered guidance by as much as 17% was mainly due to weakness in the HEYDUDE brand. Turning this brand around will take some time so weakness is expected. However, in the long run, there’s reason to believe management will handle the situation.
Crocs did a great job of handling the changing consumer tastes and trends during times of high inflation and back-to-office campaigns. Based on that evidence, investors should back the company to turn around HEYDUDE as well.
But if you’re a numbers guy, the growth story is in the international market. CROCS sales in the US have slowed down since 2022. During this time, its international growth has outpaced the local growth. It makes perfect sense for the company to explore other markets while it is facing pressures at home. If the international audience takes a liking to the company’s footwear, the growth potential is massive. It would be understandable though if investors want to wait for more evidence of international success before taking a position in the stock.
2. Skechers U.S.A. Inc. (NYSE:SKX)
Skechers U.S.A. Inc. is a footwear designer, manufacturer, seller, and marketer that operates through two segments; direct-to-consumer and wholesale. The company supplies its products through big box club stores, company-owned retail stores, factory outlets, websites and mobile apps, department stores, and other platforms. The company sources 40% of its products from China.
The stock has already run up 10.66% this year, despite losing 7.5% in a single day when the tariffs were announced. Despite announcing record 2024 revenue yesterday, the company lagged estimates. There’s good reason to be optimistic about the company though despite its exposure to China.
According to Jay Sole, who is an analyst at UBS, the company is on track to become the third-largest footwear maker in the world. It could deliver $10 billion in revenue by the end of next year. Even though Q4 earnings have disappointed with the stock plunging 12% after hours, it doesn’t negate the long-term bull thesis and could be seen as a buying opportunity.
1. YETI Holdings Inc. (NYSE:YETI)
YETI Holdings Inc. is a leading consumer and outdoor products company that retails, develops, and distributes cargo, coolers & equipment, bags, outdoor living, backpacks, and other products. The company supplies its products through its website and independent retailers. The company sources 40% of its products from China.
The stock has underperformed the S&P 500 in the last year. However, a changing business plan could make 2025 a completely different year for the company despite tariffs. Investors would be glad to know that the company’s 40% exposure to China isn’t that big a deal. In the third quarter, YETI commenced operations on its second manufacturing facility for the Drinkware portfolio line. The third facility is also in the pipeline. The interesting part is that both these facilities are outside China!
If there is one thing investors should know about this company, it’s the management’s proactive strategy to deal with tariffs. This is what CEO Matt Reintjes had to say about the company’s supply chain expansion plans:
As a reminder, approximately 40% of our total cost of goods has historically been tied to products sourced from China, primarily related to our drinkware portfolio… Notably, we commenced production at our second drinkware facility outside of China during the quarter and we are on pace for a third facility.
Along with this initiative, the company is experiencing improving demand in the international market. YETI’s international operations are relatively small, forming just 18% of the company’s total revenues. However, the 30% YoY growth in the third quarter suggests it is able to meet international demand and gain market share, which could drive significant growth for the company in the coming years.
In short, despite 40% exposure to China, the company is in a great position.
YETI Holdings is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held YETI at the end of the third quarter which was 31 in the previous quarter. While we acknowledge the potential of YETI as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as YETI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
