June 12, 2019 / 8:44 PM / a month ago

Retailers RH, Oxford Industries plan price hike to soften China tariff impact

(Reuters) - Home furnishing retailer RH and apparel retailer Oxford Industries Inc revealed major steps, including shifting production out of China and raising prices, to cushion the impact of the tariff hike on Chinese goods.

Shares of RH surged about 25%, while those of Oxford Industries rose 9% after both companies reported strong quarterly results.

RH said it selectively increased prices of its products while moving certain production and development of new products out of China and expanding manufacturing facilities in the United States to offset the impact of tariffs.

“Long term, we do not believe the current trade climate will impair our ability to achieve our stated financial goals,” RH Chief Executive Officer Gary Friedman said in a statement.

Tommy Bahama-owner Oxford Industries, which reaffirmed its full-year outlook, said it plans to hike prices selectively, if proposed tariff hike on remaining Chinese imports are introduced.

Oxford Industries is also negotiating on price reductions with factories and shifting production out of China, besides accelerating the delivery of its Fall products.

Ever since the U.S. imposed tariffs on Chinese imports in the wake of trade dispute between Washington and Beijing last year, retailers have been adopting various strategies to mitigate the impact.

Retailers like Walmart Inc and Best Buy Co Inc had warned of higher prices after Washington dramatically escalated the trade war last month with threats of new tariffs on another $300 billion worth of U.S. imports from China after hiking levies on $200 billion worth of Chinese goods.

Separately, mattress fabrics maker Culp Inc said on Wednesday the tariffs had caused “significant disruptions” throughout the furniture industry supply chain.

Culp also noted that the expectation of additional tariffs led to advance customer purchases in its upholstery segment in previous quarters, resulting in higher inventories that partly hit its sales in the fourth quarter.

Culp said it was taking steps to adjust its supply chain, including partnering with sources for cut and sew kits in Vietnam, in response to the latest round of tariffs.

Reporting by Soundarya J in Bengaluru; Editing by James Emmanuel

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