Retailers like Nike (NKE), Lululemon (LULU), and Starbucks (SBUX) are under pressure as slowing growth in China weighs on profit margins. TD Cowen managing director of retail and consumer brands John Kernan joins Catalysts to discuss how consumer weakness in China is impacting retailers.
Kernan notes that, based on his company’s latest survey, Nike has “carved out a leading position in terms of brand preference in athletic footwear. However, he thinks “investors and analysts need to rein in their expectations for China, both on a top-line and margin basis long term. It’s a lot of policy headwinds that could happen from here that are unpredictable and unknown,” Kernan explains.
He warns of potential retaliation from China in response to US tariffs, regardless of who takes the White House in 2025. However, he believes that a Trump presidency would bring “increased rhetoric to the table.”
On the other hand, Lululemon is one of the fastest growing brands in China, Kernan noting the company’s increased focus on the country. However, he believes there may be some headwinds fore retailers with “the rise of the domestic brands in China and their ability to steal market share.”
#NIKE #CHINA #lululemon
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