Retailers are in for a weaker-than-expected holiday shopping season, according to Wells Fargo.
, are planning on that acceleration; however, this year's shorter calendar, warmer weather and tourism trends could hinder those plans and weigh on the already battered retailers.
"We see risk ahead – a group with downward momentum on fundamentals calling for accelerating trends 3 months from now, with building inventory in the channel, an unfavorable holiday calendar ahead and likely headwinds coming from tourism and weather," Boruchow said. Boruchow said the six fewer days between Thanksgiving and Christmas this year could weigh on retailers, especially domestically oriented companies.
After two straight cold winters, weather forecasters are expecting a warmer holiday season. Boruchow said this trend could adversely affect companies in weather-sensitive categories, such asAs a result of the U.S.-China trade war, the dollar is stronger vs. most foreign currencies, which Boruchow says will impact tourism into the U.S. Less tourism spending will be a headwind for retailers, he said.
Lastly, despite sales growth topping inventory growth in the majority of 2017 and 2018, this trend has reversed this year, "partly due to tariff dynamics and partly due to slowing top-line," Boruchow said.
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