From Yahoo Finance: 2025-04-03 06:19:00

Analysts are advising against investing in apparel and footwear stocks following President Trump’s announcement of “Liberation Day” tariffs. The tariffs, set at a baseline rate of 10% for all US trade partners, will go into effect on April 5. China, Vietnam, and Cambodia face reciprocal tariff rates of 34%, 46%, and 49%, respectively. Nike and Lululemon could see significant impacts.

The apparel and footwear industry, heavily reliant on international suppliers from Asia, faces major profit losses due to the tariffs. Nike, for example, sources 11% of its products from China and 44% from Vietnam. Analysts warn of potential earnings per share hits, with Nike’s stock already down over 9% in premarket trading.

The tariff plan has created uncertainty and challenges for apparel and footwear brands, particularly those with high Southeast Asia manufacturing concentration and thin margins like Columbia, Nike, and Under Armour. Brands with diversified geographic revenue bases and higher operating margins may be better insulated, but profitability could still be significantly impacted across the board.

Off-price retailers, while moderately exposed to tariffs, may still benefit from market dislocations. However, even they could feel pressure from higher prices. The entire apparel and footwear industry faces margin impacts as costs rise due to the tariffs, leading to unprecedented uncertainty and challenges for many companies.

Companies with low international sourcing, higher merchandise margins, strong pricing power, and diverse revenue bases may fare better during this period of disruption. Conversely, brands with weaker balance sheets, struggling to pass on price increases, or facing backlash from anti-American sentiment could face more challenges. Balance sheet health will be crucial during this uncertain time.



Read more at Yahoo Finance: Trump’s ‘Liberation Day’ tariffs make apparel stocks like Nike uninvestable: Wall Street reacts