The parent company of Kathmandu and Rip Curl is redirecting some of its United States inventory to other global markets amid uncertainty around tariffs imposed by US President Donald Trump.
In a statement to market on Monday, KMD Brands reported that Rip Curl and its other brand Oboz Footwear have significant operations in the US market. Rip Curl US accounts for approximately 12 per cent and Oboz US approximately 7 per cent of the group’s annual sales.
The US has announced global tariff increases on products manufactured outside the US, including significant tariff rate increases on goods sourced from Asian countries.
According to KMD, Oboz and Rip Curl product is currently manufactured across Asia. The group's latest modern slavery statement for 2024 reveals that China is its largest sourcing country as a percentage of spend on branded products, at 35 per cent with 79 factories in total.
Vietnam comes second at 31 per cent, with 22 factories, followed by Indonesia at 13 per cent with six factories. Within Trump's tariffs announced last week, there is a 46 per cent flat tariff on goods from Vietnam, alongside a 37 per cent tariff on all Bangladeshi imports, and a 27 per cent tariff hike for all India imports.
Meanwhile, Trump has also revealed a 34 per cent tariff hike on almost all Chinese imports, which is reportedly on top of an existing 20 per cent tariff, bringing total duties to at least 54 per cent.
“These tariff increases have created significant uncertainty for most apparel and footwear businesses which sell into the US and will likely result in price increases that may impact consumer demand,” KMD Brands reported, adding it is monitoring market dynamics, assessing optimal timing of price increases in response to higher input costs, and reviewing cost mitigation options to protect profitability.
“Until we have more clarity on changes to consumer demand in the US, the group will redirect some US inventory to other key global markets, or hold inventory with existing international third-party logistic (3PL) partners.
“Both Rip Curl and Oboz have significant seasonal inventory in the US which was landed prior to the recent tariff increases. Given significant consumer uncertainty and the fluid nature of possible tariff negotiations, it remains too early to provide a reliable estimate of the likely financial impact for the remainder of FY25.”
Group CEO and managing director Brent Scrimshaw said the new US tariffs are another headwind in an already challenging consumer environment in the US.
“We are evaluating all strategic options, including pricing, cost mitigation and inventory investment, to safeguard the long-term value of our brands and protect our stakeholders,” Scrimshaw said.
KMD Brands is the latest ASX-listed entity to react to the US tariffs.
In a statement last week, luxury online platform Cettire told investors that the tariffs will likely impact the majority of online and bricks and mortar luxury retailers, as a significant proportion of luxury items are manufactured in the EU.
“Cettire is currently assessing the full implications of these tariff changes on the company and its global operations, noting that several major luxury brands have indicated they would seek to increase pricing of luxury goods in the US market to mitigate possible tariff changes.
“Cettire began identifying strategies to prepare for and mitigate potential changes to the US tariff regime throughout calendar 2024 and the first quarter of 2025.
“The company’s localisation strategy has underpinned a continued broadening of the geographic revenue base, which Cettire expects to continue.”
In its statement, Cettire confirmed that 41 per cent of its total gross sales in the first half of FY25 related to goods manufactured in the European Union and sold to customers located in the US.
The company added that mo immediate changes to the US de minimis exemption have been made in relation to EU manufactured goods. As such, shipments below $US800 will continue to be exempt from duties and are unaffected by tariff changes.
Cettire also noted that its average order value in H1-FY25 was A$821 (~US$514).