Footwear Stocks Extend Rally on Trade Relief
December 18 2019 - 12:16PM
Dow Jones News
By Amrith Ramkumar
The "phase one" U.S.-China trade deal is relieving some pressure
on retailers, and UBS analysts think one group in particular stands
to gain: Footwear stocks.
That is because canceled U.S. tariffs on Chinese consumer goods
previously scheduled for Sunday would have had an outsize impact on
shoe sellers, while duties that went into effect in early September
were simply cut to 7.5% from 15%. That means other apparel sellers
might not benefit as much from the initial trade pact.
The bigger winners from the deal would be companies like
Skechers USA Inc., Carter's Inc. and Under Armour Inc., the UBS
analysts argue. Skechers shares rose about 3% Wednesday, bringing
their rally for the year to 86%, while Under Armour and Carter's
each advanced more than 1%.
"Footwear companies which sell a high percentage of goods in the
U.S. sourced from China probably benefit the most," the analysts
said in a Wednesday note.
The climb for footwear sellers highlights how investors are
still grappling with the winners and losers from trade-policy
shifts heading into 2020. Uncertainty remains about the next steps
in the U.S.-China trade spat and how they might impact corporate
profits, because many companies have already taken steps to
mitigate the impact of tariffs.
The UBS analysts raised their price targets on shares of
Skechers and Carter's, projecting the shift in tariffs will boost
earnings moving forward.
While they estimate the trade pact won't boost profits as much
at other apparel sellers such as Macy's Inc. and Nordstrom Inc.,
those stocks continued paring some of their monthslong drop
Wednesday. Macy's rose nearly 4%, while Nordstrom climbed 2.3%.
Investors in the sector are looking ahead to quarterly results
from Nike Inc., scheduled to be released after the market closes on
Thursday.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
December 18, 2019 12:01 ET (17:01 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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