Voxx ‘Game Plan’ Is to Hike Prices to Offset Higher Costs of Tariffs, CEO Says
Voxx International expects soon to impose price increases to offset higher costs of Section 301 tariffs on Chinese imports, CEO Pat Lavelle said on an Oct. 11 earnings call. Printed circuit assemblies took an especially heavy hit among the items targeted with 10 percent tariffs that took effect Sept. 24 and are scheduled to rise to 25 percent on Jan. 1. Most of the products “within the competitive field” on which Voxx plays are sourced from China, but all manufacturers of similar ilk face the same challenges, he said. “I don't see anybody having a real distinct advantage based on where they're getting their product,” Lavelle said. “Most of it comes out of China. So as the tariffs come through, we will adjust our prices, our selling prices, and you'll see increases in prices. That is the game plan.”
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Voxx plans to be "allocating more dollars” in support of new products debuting in its premium-audio segment in the fiscal year second half ending Feb. 28, 2019, Lavelle said. He expects “tariff-related expenses” may lower gross profit “somewhat” in premium audio, but thinks that margins “should remain strong and the segment will remain profitable," with year-over-year operating profit perhaps rising by more than half. The company also is working on “offsetting some of the higher cost” of the tariffs by “gaining efficiencies and managing inventory, storage and freight, and we continue to look for other ways to lower fixed expenses,” the executive said.