- Today's retailers have e-commerce to thank for buffering the depressed demand they will see in their brick-and-mortar storefronts.
- Thirteen US retail firms are particularly exposed to the fallout. We list them from least to most.
- Visit Business Insider's homepage for more stories .
These 13 retail stocks are the most at risk of steep losses as China's coronavirus spreads (HBI, RL, LB, UAA, LULU, GPS, CPRI, GOOS, VFC, PVH, TPR, NKE, EL)
History shows that viral outbreaks can have a significant, if short-lived, effect on sales, Credit Suisse's Michael Binetti said in a note Monday.
Retailers with big businesses in China could see their sales numbers drop this Lunar New Year as the country combats the spread of coronavirus. For the most exposed companies, the cost could amount to a 3-5% reduction in earnings per share next quarter if coronavirus continues, Credit Suisse analyst Michael Binetti said in a Monday research note. On top of that, there's a risk that media coverage itself could eat into share performance, he said, adding that price-earnings ratios, a measure of how expensive a company's share price is relative to value, could fall by 10-15%. The hit to revenue comes during a week that typically would be a boon for retailers: the Lunar New Year. Instead, this year, coronavirus has left at least 12 cities in China under lockdown, restricting the movement of at least 40 million people. Binetti based his analysis of the risk of coronavirus off of historical data from SARS and avian flu outbreaks in 2003 and 2004-2006, respectively. To be sure, today's retail companies have certain tools in their back pocket that weren't available in previous outbreaks nearly two decades ago, Binetti said: e-commerce makes up a bigger share of business and should be more durable, and China and the Centers for Disease Control and Prevention are more equipped to combat the spread of contagious disease, he said. Plus, retailers have bounced back from contractions quickly in the past, he added. Still, previous viral outbreaks in China hampered retail, Binetti said: "At the height of reported SARS cases, Mainland China retail sales growth slowed to just +4%," about half the rate seen in the preceding 12 months. The "fear factor" produced by media coverage led to a 16% contraction to price-earnings ratios on top of that, he added. Binetti pointed to a basket of US companies that get a significant share of their revenue from Chinese sales. Here are the thirteen companies exposed, from least to most:
13. Hanesbrands Inc.
Courtesy of Champion
Ticker: HBI
Percent of revenue exposed: 1%
Major brands: Champion, Hanes, Maidenform, Playtex
Source: Credit Suisse
12. Ralph Lauren Corp
Richard Drew/AP
Ticker: RL
Percent of revenue exposed: 1%
Major brands: Club Monaco, Ralph Lauren Jeans Company
Source: Credit Suisse
11. L Brands Inc.
Yelp/James M
Ticker: LB
Percent revenue exposed: 1%
Major brands: Victoria's Secret, PINK, Bath & Body Works
Source: Credit Suisse
10. Under Armour Inc.
Amazon
Ticker: UAA
Percent of revenue: 2%
Major brands: Under Armour, MapMyFitness
Source: Credit Suisse
9. Lululemon Athletica Inc.
Colin McConnell/Toronto Star via Getty Images
Ticker: LULU
Percent revenue exposed: 3%
Major brands: Lululemon
Source: Credit Suisse
8. Gap Inc.
Bethany Biron/Business Insider
Ticker: GPS
Percent revenue exposed: 3%
Major brands: Old Navy, Gap, Banana Republic, Athleta
Source: Credit Suisse
7. Capri Holdings Ltd.
Getty/Miguel Medina
Ticker: CPRI (formerly KORS)
Percent revenue exposed: 4%
Major brands: Versace, Jimmy Choo, Michael Kors
Source: Credit Suisse
Canada Goose Holdings Inc.
Reuters/Shannon Stapleton
Ticker: GOOS
Percent revenue exposed: approximately mid-single digit
Major brands: Canada goose
Source: Credit Suisse
5. VF Corporation
Christian Vierig/Getty Images
Ticker: VFC
Percent revenue exposed: 6%
Major brands: Vans, Timberland, Jansport, The North Face
Source: Credit Suisse
4. PVH Corp
Flickr/Jimmy Baikovicius
Ticker: PVH
Percent revenue exposed: 7%
Major brands: Calvin Klein, Tommy Hilfiger
Source: Credit Suisse
3. Tapestry Inc.
Reuters
Ticker: TPR
Percent revenue exposed: 15%
Major brands: Coach, Kate Spade, Stuart Weitzman
Source: Credit Suisse
1. Nike Inc. (tied for first)
Reuters
Ticker: NKE
Percent revenue exposed: 17%
Major brands: Nike, Converse, Hurley
Source: Credit Suisse
1. Estee Lauder Companies Inc. (tied for first)
Jamie W./Yelp
Ticker: EL
Percent of revenue exposed: 17%
Major brands: MAC, Estee Lauder, Smashbox Source: Credit Suisse
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