The 10% to 25% added tariffs Trump threatened on August 1 included apparel coming into the U.S. from China.
Burlington (BURL) - Get Burlington Stores, Inc. Report , which reports earnings on August 29, should be negatively impacted, right? Wrong, says one analyst. Meanwhile, the stock has fallen as much as 5% to $170 a share since July 31, the day before Trump's threat.
"Given the indiscriminate sector sell-off, we would be buyers of the off-pricers BURL and (TJX) - Get TJX Companies Inc Report as well as (BOOT) - Get Boot Barn Holdings, Inc. Report , in the wake of the company's upside earnings surprise," D.A. Davidson & Co. analyst John Morris wrote in a note.
The losses since July 31 have moderated to just under 2%, possibly making it less attractive. Still, a solid earnings report could lift the stock from it's current $177 a share level.
Morris gave two reasons why Burlington shouldn't be selling off and isn't impacted much by potential tariffs. Firstly, "We have stated before that if anything, off-price retailers could benefit from tariff disruption, which can free-up buying opportunity from the full-price channel due to inventory disruptions," Morris said.
Secondly, Burlington's production out of China isn't as pronounced as some of its peers are. "Given the tariff news, we would be cautious on the following brand apparel companies given their sourcing exposure: (ZUMZ) - Get Zumiez Inc. Report , (LB) - Get L Brands, Inc. (LB) Report , (PVH) - Get PVH Corp. Report , and (CRI) - Get Carter's, Inc. Report , Morris said.
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