Whether it’s missed Q1 estimates pointing to a slow second quarter, lobbying efforts to eliminate what could potentially be detrimental tariffs for footwear, here’s what will be top of mind for the week ahead.
Tariffs: A letter signed by more than 170 firms, including Nike and Adidas, have asked U.S. President Donald Trump to reconsider the inclusion of shoes in the plan to tax all footwear imports from China. The tariffs, they said, could reach as high as 67.5 percent in some cases. The Footwear Distributors and Retailers of America, a trade organization, said in its letter that the industry faces a $3 billion duty bill every year, and that the proposed 25 percent tariff will add $7 billion in additional costs for customers, not to mention that it could result in some families paying nearly a 100 percent duty on their shoes.
For now, the Trump administration has set early next month for the comment period, and June 17 for a public hearing on the proposed tariffs.
Brexit: Failing to deliver consensus on a withdrawal agreement to exit the European Union, Theresa May will step down as the British Prime Minister on June 7. What happens next will depend on who her successor will be.
Earnings: It’s still earnings season for many retailers and apparel brands that have yet to report their latest quarterly results. And more importantly, what they say about the months ahead could be a good read on just how well the global economy is doing.
Many companies that posted earnings reports this week didn’t fare that well. Results from VF Corp. for the fourth quarter and fiscal year 2020 guidance indicate a possible slowdown in its outdoor and active business segments. Nordstrom Inc. lowered full year guidance due to first quarter results, and explained that it has already taken steps to correct execution issues, while Kohl’s Corp. also lowered guidance due to reduced first-quarter profits. Target Corp. and The TJX Cos. Inc., were the exceptions, with each one noted for perceived value in the respective distribution channel.
It’s easy to blame the quarterly misses on the wrong merchandise mix, but what if the problem is something more elementary and out of a retailer’s or brand’s control? What if consumers are pulling back on non-essentials because they’re suddenly realizing the proposed tariffs President Trump has tweeted about could actually go into effect, and that means inflation ahead?
Companies scheduled to report earnings next week include J. Crew Group on Tuesday; Canada Goose Holdings Inc., Capri Holdings Ltd., Abercrombie & Fitch Co., J. Crew Group and PVH Corp. on Wednesday; and Dollar General Corp., Dollar Tree Inc., Burlington Stores Inc. and Gap Inc. on Thursday.
Consumer confidence: The Conference Board’s reading for May, the start of retail’s second quarter, will be disclosed on Tuesday. With most retailers saying there seems to be a softening of sales at the start of the second quarter, it’ll be interesting to see what consumers say about the economy when they discuss expectations six months out.