Why Footwear Stocks Nike, On Holding, Deckers, and Boot Barn Were Tumbling Today

Stocks are plunging today on President Trump's announcement of a 10% blanket tariff on global imports and higher rates on most major trading partners last night.

Unsurprisingly, the news sent broad swaths of the stock market into a tailspin, and among the hardest-hit sectors was footwear and apparel. Nearly all of these products are manufactured outside the U.S., often in Asia or Latin America, and the tariffs are likely to make prices rise. This will squeeze consumers on discretionary products, putting these companies in the difficult position of trying to pass along those costs to consumers or absorbing some of them themselves, thereby cutting into their margins.

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On a day when the S&P 500 (SNPINDEX: ^GSPC) was down 5.1% as of 1:18 p.m. ET, footwear stocks were getting shellacked, with several down double digits. Among them were Nike (NYSE: NKE), off 12%; Deckers (NYSE: DECK), down 15.8%; On Holdings (NYSE: ONON), falling 14.9%; and Boot Barn (NYSE: BOOT), down 15.1%.

Image source: Getty Images.

Are footwear prices going up?

In recent years, footwear companies like Nike have worked hard to diversify out of China into countries like Vietnam, but that strategy seems to have backfired, or at least did not help neutralize the "Liberation Day" tariffs announced on April 2.

The "reciprocal tariffs" are based on a percentage derived from the U.S. trade deficit with individual countries and calculated to balance the trade deficit. As a result, China was hit with a 34% reciprocal tariff, while Vietnam received a 46% reciprocal tariff.

As for individual stocks, Nike's plunge is especially noteworthy, as it's rare for an industry leader and a blue chip stock to fall double digits in a single session. In fiscal 2024, Vietnam, Indonesia, and China accounted for the manufacture of nearly all of Nike brand footwear, at 50%, 27%, and 18%, respectively. Its apparel base is a bit more diversified, with 28% in Vietnam, 16% in China, and 15% in Cambodia.

Bringing that production back to the U.S. is both unrealistic and impractical for Nike. The company had warned that tariffs would impact margins, and acknowledges it as a risk, but this seems to be worse than the market had expected.

Deckers, best known for its HOKA and UGG brands, is in a similar position. The company's manufacturers are primarily located in Asia, and it has supervisory offices in China, Indonesia, and Vietnam. Deckers has already plunged following disappointing guidance in its fiscal third-quarter earnings report, as investors seemed to price in some impact from weakening consumer sentiment and the trade war.

On Holdings is another fast-growing sneaker company based in Switzerland, but it still counts on the U.S. as a major market, as 64% of its revenue came from the Americas in 2024. On has a similar manufacturing base to its peers, as eight of nine primary footwear suppliers are in Vietnam, with the other one in Indonesia. Apparel, meanwhile, is more diversified across Vietnam, Slovenia, Portugal, Turkey, and China.

Finally, Boot Barn doesn't sell athletic footwear, but it is subject to the same forces as its peers. Boot Barn manufactures most of its exclusive brand products in Mexico and China, but it also sells third-party-branded products, though those are likely imported as well. Boot Barn's flexibility as a retailer could allow it to sell more domestically manufactured products, but it's unclear if it has the capability to do so.

What's next for the footwear sector?

It's hard to know what the impact of these tariffs will be, but they're likely to provide a meaningful setback for the sector. However, they could be negotiated, and they are unlikely to be permanent over the long term.

For companies like Nike that have been struggling, the tariffs are likely to delay its recovery. The sell-off is making valuations across the sector look attractive, but these stocks could certainly fall lower.

Over the long term, however, these companies should survive and continue to grow. All four stocks have strong brands, and consumers need to buy sneakers. Still, the uncertainty in the near term may be painful to ride out.

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Jeremy Bowman has positions in Nike. The Motley Fool has positions in and recommends Deckers Outdoor and Nike. The Motley Fool recommends Boot Barn and On Holding. The Motley Fool has a disclosure policy.