US retail leaders concerned at tariff hikes

NEW YORK - High-ranking executives with US retailing leaders have voiced concerns over an adverse impact on business operation by possible tariff hikes on more imports.

Wisconsin-based chain store brand Kohl's Corp on Tuesday posted $4.09 billion in total revenue in the quarter ending May 4, down 2.9 percent year-on-year.

Beside the disappointing earnings per share of $0.62 in the last quarter, Kohl's also cut projected annual earnings to $5.15-5.45 per share from $5.8-6.15.

"In the guidance we've assumed that there would be an impact to the gross margin, which is in part why we've reduced the outlook for margin from what we previously had," Bruce Besanko, chief financial officer with Kohl's, said at a conference call.

Besanko added that tariff hike is one of the two factors contributing to revising down growth outlook.

"The year has started off slower than we'd like, with our first quarter sales coming in below our expectation," said Michelle Gass, chief executive officer with Kohl's.

Currently, Kohl's sources more than 20 percent of merchandise from China and tariff hikes mainly impact home and accessories products imported from China, according to Besanko.

Additional tariffs on imported products could hurt in-house brands, according to another chain store brand J.C. Penney Company Inc.

"In looking ahead, we do anticipate a more meaningful impact on both our private and national brands if the potential fourth tranche of tariffs does go into effect on all Chinese imports," said Jill Soltau, the company's chief executive officer at a conference call on Tuesday.

J.C. Penney reported $154 million in net losses in the quarter ending May 4, up from the $69 million in loss in the same period of last year. Comparable sales at the company dropped 5.5 percent in the last quarter, compared to a decline of 1.8 percent a year earlier.

Among the US home improvement suppliers, retailing company The Home Depot Inc expects an impact worth around $1 billion on its business by the recent US 25 percent of additional tariffs on $200 billion worth of products imported from China.

Carol Tome, chief executive officer with The Home Depot, said the company is working through the impacts of latest round of tariff hikes and has not factored them into its latest guidance of results.

The Home Depot on Tuesday reported $2.5 billion of net earnings in the first quarter of fiscal 2019 ending May 5, an increase of 4.16 percent year-on-year. The company still expects around 3.3 percent of sales growth in fiscal year 2019 on the basis of a 5.7 percent expansion in the first quarter.

Imposing an additional 25 percent tariff on imports from China would affect a lot of products of apparel and accessories for both Macy's in-house brands and national labels and it's hard for customers not to be impacted, said Jeff Gennette, chief executive officer with leading US department store Macy's Inc recently.

More than 12,000 brick and mortar stores with 15 weak US public softlines retail companies could be closed if the United States levies 25 percent of additional tariffs on all products imported from China, according to a recent research note by the Swiss investment bank UBS.

The stock prices with Kohl's dived 15.07 percent from Tuesday to Wednesday while the prices of J.C. Penney share lost 12.61 percent in the last two sessions.

Upon closing on Wednesday, SPDR S&P Retail Exchange Traded Fund (ETF), which follows retail segment of S&P Total Market Index, dropped 4.86 percent since May 10.