With trade war concerns intensifying, major companies are warning against additional taxes on imports from China, including Kohl’s, JC Penney, Macy’s, and Home Depot.
That comes after the White House threatened to add another 25% of tariffs on $300 billion of Chinese goods, which would include apparel and shoes. That would represent the third round of tariffs, which have so far impacted goods like furniture.
Kohl’s CEO Blames Tariffs for Lower Forecast
Kohl’s for example missed earnings expectations and cut is outlook for full-year 2019. Its adjusted EPS of 61 cents on revenue of $4.09 billion was below expectations for 68 cents on revenue of $3.94 billion. Same-store sales fell 3.5%, as compared to expectations for a drop of only 0.2%. The company now expects adjusted EPS in a range of $5.15 to $5.45, as compared to earlier estimates for a range of $5.80 to $6.15.
“Right now, these tariffs primarily affect our China-sourced merchandise in our home and accessories business,” CFO Bruce Besanko said, as quoted by CNBC. “China is not our largest source of merchandise but it is a big one. It’s a little over 20% of our goods.”
JC Penney Says Tariffs could Hurt In-House Brands
At JC Penney, net losses during its fiscal first quarter nearly doubled.
“In looking ahead, we do anticipate a more meaningful impact on both our private and national brands if the potentials fourth tranche of tariff does go into effect on all Chinese imports,” Penney CEO Jill Soltau said, as quoted by CNBC.
Macy’s CEO Says it’s Hard to See How Tariffs Won’t Hurt Shoppers
“When you do the math, it’s hard to find a path through that wouldn’t impact customers,” he said. “It will affect a lot of apparel and accessories categories,” for both Macy’s in-house brands and national labels,” says CEO Jeff Gennette. “It would be hard for Macy’s to get to a place “where you don’t have a customer impact.”
While the company’s first quarter earnings beat expectations, sales did fall year over year. And while it also reaffirmed its profit outlook for 2019, the CEO says, “This potential fourth tranche of tariffs was not contemplated when we provided the annual guidance.”
Home Depot Says the Impact is “Manageable”
Home Depot said that there is “roughly a billion-dollar impact” to its business, but it’s “manageable.” However, the latest round of 25% tariffs aren’t baked into the retailer’s latest forecast. CFO Carol Tome said, “We are working through the impact of these tariffs and, as a result, have not included them in today’s guidance.”
In addition, more than 170 shoe retailers sent a letter to President Trump asking that he not raise tariffs on footwear. “These tariffs would mean some working American families could pay a nearly 100 percent duty on their shoes,” they noted, as reported by CNBC.
In fact, The Footwear Distributors and Retailers of America has said the tariffs could cost shoe shoppers more than $7 billion each year.
“While U.S. tariffs on all consumer goods average just 1.9 percent, they average 11.3 percent for footwear and reach rates as high as 67.5 percent. Adding a 25 percent tax increase on top of these tariffs would mean some working American families could pay a nearly 100 percent duty on their shoes,” the letter said. “This is unfathomable.”