Retailers will continue to be concerned about rising inflation and strains in the global supply chain as they work through the next earnings season. Russia’s invasion in Ukraine is also mentioned by investors and analysts. which entered its second week on Thursday.
Numerous retailers stopped their operations temporarily in Russia either to show corporate support for the war, or to prevent them from doing business in Russia as a result of the sanctions that have been imposed on logistics.
Chuck Grom, an analyst at Gordon Haskett said that retailers’ biggest concerns will be how long the crisis lasts.
Grom explained that you need to realize the problem is worse the longer it takes. The consumer is more likely to become absorbed by the circumstances.
The retailers are trying to predict future demand and stock shelves without overordering merchandise. With the increase in immunity and decreasing Covid cases, retailers are trying to attract consumers back to their stores. But it may prove more challenging than a year ago when Congress approved the family stimulus payment.
Pittsburgh clothing store American Eagle OutfittersThe company said Wednesday that the wars between Russia, Ukraine and Poland are being taken into consideration in its forecast for next year. It didn’t give any details about the impact on consumer demand or financial costs. American Eagle has no brick-and-mortar stores outside North America and Hong Kong. But it does ship merchandise to 81 nations.
Michael Mathias the Chief Financial Officer stated that American Eagle’s awareness of many factors is being affected by the rising inflation. He also mentioned that American Eagle began to lose stimulus payments last spring to consumers. The disruptions to the global supply chain continue, including the War in Ukraine.
“Against this backdrop, we’re taking a cautious view,” Mathias said.
American Eagle stated that earnings would decline by half compared to the previous year due in part to higher freight costs. However, it expects earnings to rise in the second half.
Victoria’s Secret is a Russian-owned lingerie store. It also mentioned the war. It stated Wednesday that its fourth-quarter fiscal results were available. inflation and “global unrest”In the next months, it will be a difficult environment. Victoria’s Secret released a disappointing outlook on the first quarter. However, it stated that the company believes the third quarter will bring better results.
Kohl’sMichelle Gass, Chief Executive, was asked Tuesday by analysts on an earnings conference phone about Ukraine’s situation and what it could mean for the business of the department store chain.
“We are ready for the uncertainty. Gass stated that they had considered this as we guided the year. We’ll keep close by and remain responsive.
Contingency plans are created by retailers to close down stores
These factors could all have an impact on American consumers. From food producers to auto manufacturers, companies will bear more of the burden. skyrocketing oil pricesSupply chain problems that can continue for years. Cost increases can often be passed onto the customer.
David French (senior vice president for government relations, National Retail Federation), a leading retailer trade organization, stated, “There are implications to U.S. retailers regarding the higher cost energy,”. The importance of Russia… and Ukraine…as major agricultural areas has implications on food prices for U.S. retailers.”
He said that “Those are probably most significant first-order consequences,” and added that U.S.-based retail outlets have limited exposure to Russia or Ukraine. However, he did not mention Ukraine as a significant hub for IT outsourcing companies, something that could be a bigger problem if the crisis continues.
French stressed that consumers are reporting confidence declines even though they shop as though confidence is high, despite the fact that the pandemic has been affecting them. The holiday retail sales rose by 14.1% compared to the previous year. according to NRF,In spite of inflation, the spread of the omicron variant.
Simeon Siegel from BMO Capital Markets echoed the sentiment. Siegel added, “Abside from what it says about humanity as a whole, as we learned in Covid, people really are good about not letting problems bother them until it knocks on their door.”
Companies have also been quick to voice their opposition to the Kremlin’s invasion of Ukraine.
Ikea, a furniture retailer, announced Thursday that it will close all its Russian stores and stop production. It also plans to halt all imports from and exports to Russia and Belarus.
“The war in Syria has had a devastating human impact on the country and caused serious disruptions to trading and supply chain conditions. Therefore, Ikea decided to suspend its operations in Russia for a time.” the company said in a statement.
An assertion Nike’s website in RussiaAccording to Nike, the shoe giant cannot guarantee delivery of products in Russia at this time. CNBC spoke with a Nike spokesperson who said that Nike had decided to suspend its operations in Russia due to the rapid changing situation and increased operational difficulties.
“We are deeply troubled by the devastating crisis in Ukraine and our thoughts are with all those impacted, including our employees, partners and their families in the region,” the spokeswoman said.
Both British fashion online retailers Boohoo as well Asos suspended Russian sales. The off-price retailer TJXAccording to a securities filing, it stated in writing that Familia would sell its 25% share in low-cost Russian apparel retailer Familia. The Russian company has more than 400 outlets in Russia. TJX stated that it might have to file impairments charges as a result.
Craig Johnson is the founder of Retail Consulting Group. CGPAccording to him, retailers or other brands that have a strong presence in Central and Eastern Europe should be able to develop, if perhaps not implement, contingency plans.
“Contingency plans are most critical for in-store and back office employees and hours of operations,” Johnson said. They also cover physical, cyber, vendor, public and communications security as well trimming and delaying merchandise receipts if necessary.
This is a developing story. Keep checking back for more updates.