Investing Insights: Textile Retailers Face Challenging Second-Half Trading Amidst Positive Consumer Sentiment Boost
As the US presidential election draws near, analysts at Morgan Stanley are closely monitoring the consumer sentiment and its impact on textile retailers. Despite some quarter-on-quarter demand deterioration, recent surveys indicate that Americans are feeling more optimistic about the future, which could benefit the retail sector.
Historically, textile-focused retailers have performed well during election seasons, with fundamentals holding up better than market fears. While there are still some headwinds for these companies in the second half of 2024, analysts believe that there is limited risk to income estimates.
Additionally, the tax plans proposed by Democratic candidate Kamala Harris and Republican incumbent Donald Trump could have significant implications for corporate returns. Trump's plan to cut corporate taxes is expected to boost profits, while Harris's proposal to increase them could lead to a decline in earnings.
For textile firms, Burlington Stores Inc, Foot Locker Inc, Nordstrom Inc, Lululemon Athletica Inc, Nike Inc, and Skechers USA Inc are among those that could be most affected by changes in the US corporate tax rate.
Overall, investors should keep a close eye on consumer sentiment, election developments, and tax policy changes as they could have a significant impact on the performance of textile retailers and related stocks in the coming months.