clothing brands

Ukraine war to sully clothes sales from Levi to Ralph Lauren

Reuters
Ukraine war to sully clothes sales from Levi to Ralph Lauren

LEVI STRAUSS. The Levi Strauss & Co. label is seen on clothes in a store at the Woodbury Common Premium Outlets in Central Valley, New York, February 15, 2022.

Andrew Kelly/Reuters

Analysts see particular exposure to Calvin Klein and Tommy Hilfiger owner PVH, Levi Strauss, Ralph Lauren, Michael Kors owner Capri Holdings, and Nike, who get roughly 25% to 40% of sales from Europe

Levi Strauss and Ralph Lauren are among US apparel brands likely to be worst hit by Russia’s invasion of Ukraine which is again clogging supply chains in Europe where they derive at least a quarter of sales, Wall Street analysts say.

American clothes firms’ European businesses were just recovering from two years of pandemic restrictions. But war-related Western sanctions on Moscow, airspace bans, and shipping route changes have put new squeezes on East-West supply chains.

“Cargo checks are now one of the biggest disruptions to shippers, making sure they are not breaking sanctions at ports in the EU and the UK,” said Jane Hali, chief executive officer of investment research firm Jane Hali & Associates.

Analysts see particular exposure to Calvin Klein and Tommy Hilfiger owner PVH, Levi Strauss, Ralph Lauren, Michael Kors owner Capri Holdings, and Nike, who get roughly 25% to 40% of sales from Europe.

“Europe is definitely going to feel the brunt of the economic damage…which will impact consumer sentiment and consumer wallets,” CFRA Research analyst Zachary Warring said on the fallout for apparel retailers.

Downgrades

Due to the war, Wedbush analysts have reduced yearly revenue growth estimates by anywhere from 100 to 400 basis points for Adidas and at least eight US-based companies including Skechers USA and Farfetch Ltd.

The brokerage also downgraded ratings on PVH and Ralph Lauren’s stock to “neutral” from “outperform,” while reducing Nike’s price target.

Adding to sales pressures, numerous brands have also halted operations in Russia altogether in protest or because of the newly difficult operating environment. Chinese manufacturers had been sending more goods to Europe by rail across Russia.

Companies with a smaller European presence, such as Carter’s, Bath & Body Works, and Kate Spade owner Tapestry, are likely to be more insulated, analysts said, but the challenge remains sector-wide.

“We’re afraid it won’t just be retailers with high exposure to Europe but most of retail,” CFRA’s Warring said. – Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.