Long-term tariff predictions have proven too tough for these retailers. Now it's derailing their stocks.

Ross Stores and Deckers Outdoor Corp. announced they would not provide full-year financial forecasts due to persistent macroeconomic and geopolitical uncertainty, specifically citing prolonged inflation and evolving trade policies. Ross Stores CEO Jim Conroy noted that over half of their goods originate from China, creating profitability pressure if tariffs remain high. Following the announcement, Ross Stores' shares fell 11.3% and Deckers' stock dropped 14.1% in after-hours trading.

Analysis

Ross Stores Inc. (ROST) and Deckers Outdoor Corp. (DECK) have withdrawn their full-year financial guidance, citing heightened macroeconomic and geopolitical uncertainty, specifically referencing prolonged inflation and evolving trade policies. Ross Stores' CEO, Jim Conroy, highlighted that over half of the company's merchandise originates from China, leading to an expectation of profitability pressure if tariffs remain at elevated levels. This direct impact of trade policy on cost structures is a significant concern. Both companies, however, did provide forecasts for their current quarters. The market reacted negatively to this increased uncertainty and lack of long-term visibility, with Ross Stores' shares declining 11.3% and Deckers' stock falling 14.1% in after-hours trading. This development underscores the material risk that ongoing trade disputes and inflationary pressures pose to retailers with significant sourcing from China, directly impacting their ability to provide reliable long-term outlooks and potentially eroding investor confidence.

Key Decisions for Investors

• Investors should exercise caution with Ross Stores and Deckers Outdoor Corp. due to the withdrawal of full-year guidance and the significant stock price declines, reflecting heightened uncertainty regarding future profitability amid tariff and inflation concerns.
• Closely monitor upcoming quarterly earnings and management commentary from both companies for insights into strategies to mitigate tariff impacts and manage inflationary pressures, as well as any revisions to short-term outlooks.
• Re-evaluate exposure to other retail companies with substantial China-based supply chains, as they may face similar pressures on margins and predictability, potentially leading to similar guidance revisions and stock volatility.