Tariff Changes & Retailer Support

Dear retail partners,

As we continue to closely monitor the rapidly evolving situation regarding U.S. tariff policy, we want to keep you informed about the steps we are taking to mitigate any potential impact on your business. The policy landscape remains fluid, and we are committed to being proactive in addressing these changes as they arise.

Our approach to mitigating tariff costs:

Our primary goal is to absorb as much of the tariff-related costs as possible and minimize the impact on your business. To this end, we have already taken aggressive steps to reduce expenses, including:

• Securing pricing discounts from key vendors and manufacturers.
• Relocating key manufacturing operations from China and expanding our use of manufacturers outside of China to diversify and reduce exposure to China-specific tariffs.

Tariff-related costs:

The vast majority of our products are imported and the rapid implementation of increased duty rates on most imported goods greatly increases the costs of our goods. While we are working diligently to limit the amount of increased costs and absorb as much of the increased expense as we can, we want to be transparent that, given the rapid rise in rates, we will need to adjust pricing for orders placed after May 1, 2025.

We will honor advertised pricing for orders placed before May 1, 2025. All orders placed on or after May 1, 2025 will be subject to a Tariff Supplement Charge of 10%. We will continually evaluate the Tariff Supplement Charge as the policy situation evolves, but our hope is that the Tariff Supplement can be removed or modified should conditions allow. Our goal remains limiting the amount of increased expense for our retailers, and we will continue to monitor the situation closely and update you promptly if any changes occur.

Support to offset potential increased costs:

To further assist you in managing increased expenses, we are introducing several initiatives designed to support your business:

• Freight Matrix (Effective May 1, 2025): Mud Pie is launching a Freight Matrix Program that ties all orders within a given region to a certain freight rate. This will provide you with more predictable and lower freight rates for Mud Pie shipments. More information will be shared later this month in a separate announcement.
• Suspension of credit card processing fees: Effective as of April 1, 2025, the credit card processing fee was suspended, and will remain suspended through January 31, 2026.

Additionally, we encourage you to take advantage of the following options, which can assist in mitigating the impact of tariffs:

• Extended dating promotions
• Participation in our loyalty program (qualifying customers are eligible for discounts on product, exclusive promotions, freight discounts,  etc.)
• Seasonal promotions

We value the trust you place in us and remain dedicated to providing the best possible pricing and support as we navigate these challenges together. We continue to be committed to the success of your business, and we will do our best to manage any potential challenges ahead. Thank you for your continued partnership, and please do not hesitate to reach out with any questions.

Zander Brekke