Walmart, Target, Nike among retailers affected if port strike lasts beyond this week

Yahoo Finance10-04 01:09

As the East and Gulf Coast ports remain closed for the first time in five decades, retailers are bracing for the potential impact. Should the port strike last beyond this week, retailer margins, ...

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America's largest retailer is \"going to be badly affected from food to nonfood\" due to its worldwide sourcing, he added.Costco  and Target  have a \"very high percent\" of goods being imported through the ports, per Flickinger, alongside specialty retailers like Dick's Sporting Goods , Best Buy , and Nike.Costco CEO Ron Vachris told investors that it has prepared for this mo","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","LU1267930490.SGD":"TEMPLETON GLOBAL EQUITY INCOME \"AS\" (SGD) INC A","PPC":"Pilgrim’s Pride Corporation","BK4177":"软饮料","DKS":"迪克体育用品","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","BK4567":"ESG概念","LU1066051225.USD":"HSBC GIF GLOBAL EQUITY VOLATILITY FOCUSED \"AC\" (USD) ACC","LU1496350171.SGD":"FRANKLIN DIVERSIFIED BALANCED \"A\" (SGDHDG) ACC","WMT":"沃尔玛","LU0211328371.USD":"TEMPLETON GLOBAL EQUITY INCOME \"A\" (MDIS) (USD)   INC","LU1069347547.HKD":"AB SICAV I - GLOBAL VALUE PORTFOLIO \"AD\" (HKD) INC","LOW":"劳氏","BK4146":"鞋类","BK4566":"资本集团","NKE":"耐克","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","KDP":"Keurig Dr Pepper Inc","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","LU2237443382.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA USD","LU1551013342.USD":"Allianz Income and Growth Cl AMg2 DIS USD","LU2461242641.AUD":"WELLINGTON US QUALITY GROWTH \"A\" (AUDHDG) ACC","LU2237443549.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA SGD-H","AMZN":"亚马逊","CPB":"金宝汤","LU2237443622.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc USD","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","TGT":"塔吉特","LU2237443978.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc SGD-H","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","AMKAF":"A.P. 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Costco, all the big box guys that are multi product retailers. That's who's going to have an impact,\" Telsey Advisory Group's Joe Feldman told Yahoo Finance.\nThough many retailers have already stocked up for holidays sales, perishable food can't be kept for long, while popular gift items like toys and electronics are at risk of running out. Walmart (WMT) CEO Doug McMillon told Yahoo Finance it has \"been taking action to try and reduce risk.\" But the chain, which gets roughly 60% of its US sales from groceries, can only do so much. \n\"You obviously can't pull forward your banana flow... There's some complications like that,\" he said. \nAdditionally, 80% of the nonfoods goods sold at Walmart come from the Asia Pacific and international regions, Strategic Resource Group's Burt Flickinger told Yahoo Finance over the phone. America's largest retailer is \"going to be badly affected from food to nonfood\" due to its worldwide sourcing, he added. \nCostco (COST) and Target (TGT) have a \"very high percent\" of goods being imported through the ports, per Flickinger, alongside specialty retailers like Dick's Sporting Goods (DKS), Best Buy (BBY), and Nike. \nCostco CEO Ron Vachris told investors that it has prepared for this moment. \n\"It could be disruptive based on how impactful, I can't tell you until we know length and what could happen out there. But it is in our sights. Our buyers are all over it,\" Vachris said.\nIf certain goods run into shortages because of the disruption, the scarcity could push up its prices. Yet, retailers may have limited room to pass on the cost to shoppers, as fatigued consumers push back on price hikes. \nGrocers like Kroger (KR), Albertson's (ACI), Publix, or IGA that have made a \"great effort\" to buy American will benefit, Flickinger said.\n\nWith the strike now on day three, shipping companies like Maersk (MAERSK-B.CO) have implemented fees. Per a report from TD Cowen analyst Jason Seidl, Maersk placed surcharge fees of up to $3,780 per 45 foot container.\nAnd there's no way to avoid the hit. Lowe's (LOW) told Telsey Advisory Group that it has \"temporarily shifted more imports through the West Coast.\" But rerouting usually costs 25% to 30% more, per Flickinger. If retailers opt for air freight, that typically costs \"triple\" of ocean freight, said Feldman. \n\"I expect the strike to last probably about 10 days... [But] if it lasts through Halloween, it's going to be crushing for Thanksgiving Day, Black Friday, all the way to New Year's Day,\" Flickinger said. \nAccording to Wedbush analysts Seth Basham and Matthew McCartney, a one-day strike creates 5 days worth of backlog cargo. That means a one-week strike could cause delays until mid-November.\nBesides big box retailers, some retail brands are more exposed than others. \nNike (NKE) has \"all kinds of problems\" as they ship from overseas, Flickinger said, while competitors with local manufacturing like Asics (ASCCY), Under Armour (UA), New Balance, and Brooks could benefit.\n\"They're going to have a real economic renaissance because of this dock strike, while Nike, Walmart and others are gonna get crushed,\" he said. \nNike CFO Matt Friend said on its earnings call this week that it's \"watching the East Coast port strike really closely,\" but has not \"baked anything in\" when it comes to impact on margins.\nThe sports giant estimates gross margins for its next quarter to be down approximately 150 basis points due to \"higher promotions, channel mix headwinds, and supply chain deleverage.\"\n\n\n\n  NEW YORK, NEW YORK - OCTOBER 02: Striking workers at the Red Hook Container Terminal in Brooklyn gather after members of the International Longshoremen’s Association, or ILA, began walking off the job yesterday after 12:01 a.m. ET on October 02, 2024 in Brooklyn, New York. (Photo by Spencer Platt/Getty Images)\n \n\n  Spencer Platt via Getty Images\n \n\nBrown-Forman(BF-B), maker of Jack Daniel's and other liquors, could see its international whiskey sales take a hit, per a client note from Bank of America. Nearly half of Brown-Forman's shipments are whisky produced in Louisville, Kentucky, yet 55% of total company sales are outside the U.S.\nCampbell's (CPB) recent acquisition, sauce brand Rao's, will also feel the impact. \n\"Rao's produces finished goods in San Marzano, Italy, and imports through New York and New Jersey and also uses the port of Jacksonville/Savannah to import raw materials for its Georgia production facility,\" Bank of America's Bryan Spillane wrote. \nA prolonged strike could be a headwind for Keurig (KDP), Tyson (TSN), and Pilgrim's Pride (PPC). Keurig has a second manufacturing plant in Ireland for beverage concentrate, while Tyson and Pilgrim export their chicken from the US southeast.\n—\nBrooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.\nClick here for all of the latest retail stock news and events to better inform your investing strategy","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"Policy And Regulatory","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.28.3","shortVersion":"4.28.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2472649152"}