Two footwear companies, Crocs Inc. and Steven Madden Ltd. , would be victims of the “Wall Tax,” according to Buckingham Research Group analysts. On Thursday, President Trump suggested a 20% tax on Mexican imports to pay for a border wall, but the White House has said it’s only one option. Buckingham analysts reviewed the latest Crocs 10-K, which shows about 11% of its goods are manufactured in factories in Mexico and Italy. They conclude that about 5% of the Mexico-produced goods come to the U.S., which would impact earnings per share by 5 cents before offsets. Steven Madden sources leather boots from third-party manufacturers in Mexico, about 8% to 10% of its total production volume. About 6% of these goods are likely imported to the U.S. Analysts estimate that about 70% of the company’s cost of goods sold are product costs. So the “Wall Tax” would total about $7.4 million and hurt EPS by 12 cents before offsets. Buckingham rates both Crocs and Steven Madden shares neutral. Crocs has a price target of $8.50 while Steven Madden has a price target of $34. Crocs shares are down 17.6% for the past year, and Steven Madden shares are up 10.5% for the period. The S&P 500 index is up 22% for the last 12 months.
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