Retailers to face cost struggle if tariffs on China increase: Oppenheimer's Nagel

Market Trends & Industry Dynamics - Retail sector faces challenges due to President Trump's tariff policies on China, with the XRT ETF experiencing its worst day since May and the worst week of the year [1] - Tariff-driven price increases in the retail sector have stalled recently, according to an index tracking retail price adjustments [2][3] - Fresh threats of massive new tariffs could hinder retailers' ability to pass along costs, potentially impacting margins [4] - The upcoming holiday selling season is crucial for retailers, with most of their business concentrated in this period, raising risks related to pricing and demand [5] Investment Opportunities & Potential Risks - Retailers may struggle to pass on new tariff costs, especially heading into Q4 and the holiday season [4] - If retailers have to discount, then that's a problem on the margin side, but if retailers have to re-up, then that's a problem potentially on the tariff side [4] - Consumer discretionary spending is described as "okay, but not great," with various pressures impacting consumers [6] - Continued or accelerated price increases by retailers could further pressure discretionary spending [7] Company Performance - Companies like Five Below, Estee Lauder, Best Buy, and Capri are among the hardest hit by the tariff concerns [1]