Apparel stocks crater as harsh tariffs hit Southeast Asian manufacturing
Apr. 03, 2025 2:15 PM ET
By: Amy Thielen, SA News Editor
The apparel sector is underwater on Friday as heavy tariffs on merchandise manufactured in Southeast Asian countries like Cambodia, Vietnam, and Sri Lanka are hit with tariffs of 30% to as much as 49%.
To mitigate the damage from the deteriorating relationship between Beijing and Washington, many U.S. companies migrated production to countries in Southeast Asia 6 years ago to capitalize on cheap labor and inexpensive textile costs.
But now, faced with crippling tariffs ranging from 32% for Indonesia, 37% from Bangladesh, 44% from Sri Lanka, and 46% from Vietnam, these companies will need to pass these costs along “in one form or another since they cannot reposition their sourcing,” said Morgan Stanley’s Simeon Gutman, a strategy that could backfire as consumers tighten their belts.
While most apparel manufacturers have some exposure to Southeast Asian suppliers, those with the heaviest reliance on manufacturing in the region include V.F. Corp (NYSE: VFC) with more than half its merchandise made in Vietnam and Indonesia. Gap ( GAP) makes 29% of its apparel in Vietnam and another 18% in Indonesia, while Vietnam is responsible for 35% of Skechers’ ( SKX) footwear. Swiss-based On Holdings ( ONON) makes all of their popular sneakers in Southeast Asia with 90% made in Vietnam and 10% in Indonesia.
As a result, investors are bailing out of these stocks, leaving V.F. Corp (NYSE: VFC) down 27%, Gap ( GAP) down 20%, Skechers ( SKX) down 16%, and On Holdings ( ONON) down 15. Other notable losers in the category include: Five Below ( FIVE) down 26%, Urban Outfitters ( URBN) down 18%, Academy Sports and Outdoors ( ASO) down 17%, and Boot Barn ( BOOT) down 15%. |
