Puma currently sources around one-third of its products in China

Puma currently sources around one-third of its products in China

The boss of German sportswear maker Puma has described the threat of a trade war between the United States and China as "a headache," and says the company is evaluating shifting its sourcing to alternative countries in Asia should the tit-for-tat trade spat ramp up.

"Our sourcing people have been working on alternatives for the last two months," chief executive officer Bjørn Gulden said after the brand reported first-quarter results on Tuesday (24 April).

The White House has already proposed $50bn in tariffs on a wide-range of Chinese-made goods, with President Trump instructing the US Trade Representative to consider an additional $100bn in tariffs against China.

The concern is that while apparel and footwear have so far escaped the proposed new tariffs on products imported from China, they would possibly be back in contention for the next wave of tariff increases.

While Gulden said Puma has not yet moved any production out of China, he warned "this tariff thing" is a headache for the entire sporting goods industry as the US is its biggest market.

Puma currently sources around one-third of its products in China and another third in Vietnam, with the remaining third spread across countries including Bangladesh, Cambodia and Indonesia.

Relocating all of Puma's China-based production capacity for US-bound apparel and footwear to other markets would take about a year, Gulden said.

Other options available should the US impose tariffs on apparel and footwear imported from China include accepting a lower US margin or raising prices.

The company could also divert its Chinese sourcing capacity to serve the Chinese market, after sales in the Asia-Pacific region surged 34.8% in the first quarter.

The company yesterday raised its full-year guidance on the back of double-digit growth across all regions and product segments in the quarter and strong footwear sales. Net earnings in the three month period increased by 35.8% to EUR67.4m (US$82.3m).