Classification is based on semantic text similarity scoring and may include approximations. “No match” means no high-confidence textual match was found — not necessarily that a section was removed.

🟡 Modified Disclosure change8/10

Our reliance on independent manufacturers and suppliers located primarily in Southeast Asia subjects us to risks associated with complex and evolving international trade policies, regulatory environments, and geopolitical relations that could materially increase our costs, disrupt our global supply chain, and adversely affect our financial performance.

low match confidence

Sentence-level differences:

Reworded sentence: "The production of finished goods is outsourced to independent manufacturers, which are primarily located in Southeast Asia, predominately in Vietnam."

Current (2025):

Read full text

The production of finished goods is outsourced to independent manufacturers, which are primarily located in Southeast Asia, predominately in Vietnam. The majority of our raw materials and components used in the production of our products by our independent manufacturers are sourced from designated suppliers. As a result, our operations are exposed to risks arising from evolving international trade dynamics, including tariffs, import restrictions, customs disputes, retaliatory measures, shifting trade agreements and cross-border partnerships, and broader geopolitical instability. US administrations have enacted tariffs on imports, renegotiated or withdrawn from trade agreements, and implemented other restrictive measures. These changes can adversely affect sourcing costs, product pricing, inventory flow, and product demand, which could materially increase our cost of sales, adversely affect our gross margins, and reduce our competitiveness in the US and other markets. Customs authorities may also disagree with our claimed tariff treatment for certain products, resulting in unexpected costs that may negatively impact our gross margin. We cannot predict the outcome of ongoing or future trade negotiations, and any escalation of trade tensions could materially and adversely impact our business, financial condition, and results of operations, and those of our wholesale channel customers.

In addition to trade-related risks, our international operations and independent manufacturers are subject to a range of regulatory, operational, and reputational risks. While we require our independent manufacturers and suppliers to adhere to environmental, labor, ethical, health, safety, and other business standards and conduct periodic audits of their operations, we do not directly control their practices. Noncompliance with applicable laws or standards could lead to product recalls, regulatory penalties, the seizure or forfeiture of our products, or reputational harm. If any of our suppliers are unable or unwilling to comply with our standards, we may be forced to terminate those relationships, which could increase our costs and disrupt our supply chain. Further, if our independent manufacturers or suppliers violate US or foreign trade laws or regulations, we may be subject to extra duties, significant monetary penalties, the seizure, and forfeiture of products we are attempting to import, or the loss of our import privileges, which could have a negative effect on our results of operations.

Our international operations and independent manufacturers are also subject to other risks and uncertainties, including:

poor infrastructure and equipment shortages, which can disrupt transportation and utilities;
restrictions on the transfer of funds from foreign jurisdictions or volatile foreign exchange rates;
customary business traditions in certain countries such as local holidays, which are traditionally accompanied by elevated levels of turnover in the factories;
decreased scrutiny by custom officials for counterfeit products;
social instability and corruption, extortion, bribery, pay-offs, theft, and other fraudulent activity;
use of unauthorized or prohibited materials or reclassification of materials;
health-related disruptions, such as disease outbreaks or raw material shortages, which could impact our workforce or scarcity of raw and other materials; and
adverse changes in consumer perception of goods sourced from certain countries.

Transportation and distribution costs may also be adversely affected by fluctuating demand, fuel cost volatility, labor disputes, inflation, and political, social, and economic instability. For example, we continue to experience port congestion, increased lead times, and rising freight and energy costs. Continued global geopolitical uncertainty, rising labor tensions, or climate-related disruptions further add to the complexity of global supply chain planning and resilience, and could increase distribution costs, create further capacity constraints in Europe and adversely affect our results of operations. Additionally, the increased threat of terrorist activity and heightened customs inspections have created delays in bringing imported goods to market and increased our logistics expenses.

While we pursue mitigation strategies, including selective, staggered, and strategic price increases on our products in the US and by negotiating cost-sharing arrangements with our independent manufacturers, we may be unable to offset all resulting increases to our cost of goods sold, which could have a material adverse effect on our business, operations, and financial condition. Further, these risks may have a material adverse impact on demand for our products.

View prior text (2024)

Most of our independent manufacturers are located in Asia, and products manufactured overseas and imported into the US and other countries are subject to numerous risks and uncertainties. For example, while we require our independent manufacturers and suppliers to adhere to environmental, labor, ethical, health, safety, and other business practices and laws, and while we periodically visit and audit their operations, we do not control their business practices. If non-compliant manufacturers or suppliers cannot or will not become compliant, we will cease conducting business with them, which could increase our costs and interrupt our supply chain. Our manufacturers’ violations of laws and business standards could also result in negative publicity or product recall, which could damage our reputation, brand value, and cause us to incur additional costs. Further, if our manufacturers or suppliers violate US or foreign trade laws or regulations, we may be subject to extra duties, significant monetary penalties, the seizure, and forfeiture of products we are attempting to import, or the loss of our import privileges, which could have a negative effect on our results of operations.

Our international manufacturing operations are subject to numerous other risks and uncertainties, including the following:

tariffs, import and export controls, and other non-tariff barriers;
poor infrastructure and equipment shortages, which can disrupt transportation and utilities;
restrictions on the transfer of funds from foreign jurisdictions;
changes in governmental regulations, including with respect to intellectual property, labor, safety, and the environment;
the refusal of our partners to adopt or comply with our manufacturing policies;
customary business traditions in certain countries such as local holidays, which are traditionally accompanied by elevated levels of turnover in the factories;
decreased scrutiny by custom officials for counterfeit products;
practices involving corruption, extortion, bribery, pay-offs, theft, and other fraudulent activity;
use of unauthorized or prohibited materials or reclassification of materials;
health-related concerns that could result in a reduced workforce or scarcity of raw and other materials; and
adverse changes in consumer perception of goods sourced from certain countries.

While we have implemented measures to comply with applicable customs regulations and to properly calculate import duties, customs authorities may disagree with our claimed tariff treatment for certain products, resulting in unexpected costs that may not have been factored into the sales price of such products and our forecasted gross margin. In addition, we cannot predict whether future laws, regulations, trade remedy actions, or international agreements may impose additional duties or other restrictions on our ability to manufacture sufficient inventory or import products from one or more of our sourcing venues. Trade relations between our sourcing venues, particularly those in China, and the US have created uncertainty and there exists the potential for import duties or other restrictions on exports from China, which could increase our sourcing costs. We have transitioned most of our footwear sourcing from China to Vietnam as part of our supplier optimization strategy, and are beginning to diversify with footwear sourcing in Indonesia, but if we are unable to source our products from the countries where we wish to purchase them, or if the cost of doing so increases, it could have a material adverse effect on our business, financial condition, and results of operations. Further, because most of our products are manufactured in China and Vietnam, the possibility of adverse changes in trade or political relations with China or Vietnam, or other pressures in the region, including political instability, increased labor costs, adverse weather conditions, a natural disaster or incidence of disease could severely interfere with the manufacturing or shipment of our products and would have a material adverse effect on our operations.

Moreover, international trade policy is undergoing revision, introducing significant uncertainty with respect to future trade regulations and existing trade agreements. The negotiation of free trade agreements with countries other than our principal sourcing venues may stimulate competition for manufacturers, which may seek to export footwear, apparel, and accessories to our target markets at preferred rates of duty which may negatively affect our results of operations.

Transportation and distribution costs may be adversely affected by new regulations, increased demand, increased fuel costs, labor disputes and higher costs, inflation, and political and economic instability. For example, labor disputes are escalating in Canada as well as the US East Coast. If a labor strike occurs in the future, we may experience trucking capacity constraints and potentially higher related costs, as well as port congestion on the US West Coast. The Panama Canal is experiencing capacity constraints as well due to drought. This combined with the ongoing Russia-Ukraine and Israel-Hamas conflicts have impacted timeliness of shipments to Europe, and the resulting financial and economic sanctions imposed by various countries and organizations have affected transportation and energy costs. Further rising labor tensions, drought conditions, or additional sanctions imposed, could increase distribution costs, and create further capacity constraints in Europe and adversely affect our results of operations. Additionally, the increased threat of terrorist activity, and law enforcement responses to this threat, have required greater levels of inspection of imported goods and caused delays in bringing imported goods to market. Any tightening of security procedures could worsen these delays and increase our costs.