- With the potential for a rollback of tariffs on “some” consumer goods that China exports to the U.S., Needham analyst Anda Andreeva provided a framework of how to think about the bottom-line impact of the company.
- In her coverage, a reduction in tariffs would affect home furnishings named Wayfair Inc (NYSE:W) and, Overstock.com, Inc (NASDAQ:OSTK), and Revolve Group, Inc (NYSE:RVLV) in apparel & accessories.
- In this exercise, she conservatively assumed that the companies directly benefit from half of the 25% tariff rollback (vendors keep half) and flow through 1/3 of that to the bottom line (home manufacturers could pass through a higher percentage to the consumer to stimulate demand and given excess supply across the industry).
- A pivotal consideration to monitor is what product categories are being considered for reduced tariffs, the timing, and what portion is absorbed directly by vendors.
- She estimated that Wayfair and Overstock will see the most significant benefits (while vendors have been diversifying manufacturing, China still represented ~32% of all US furniture imports).
- While she did not imply that cost reduction would drive additional furniture demand, this could mean a much-needed boost to profitability.
- Price Action: W shares traded higher by 7.83% at $56.31 on the last check Thursday. OSTK shares traded higher by 7.67% at $28.49.
- Photo by Henrix Photos via Pixabay
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