The disruption caused by the Houthi attacks on cargo ships in the Red Sea could result in incremental costs for food retailers, according to BMO Capital Markets. “This adds an element of uncertainty for retailers (DLTR, TGT, WMT, COST, DG) as it relates to guidance/visibility in 2024, and if temporary, could add some incremental costs that companies may be reluctant to pass on given the rapid changes and uncertainty,” wrote BMO Capital Markets analyst Kelly Bania, in a note released Monday.
However, BMO said it believes that Costco Wholesale Corp.
COST,
+1.03%
is not currently experiencing disruption to date. “They generally are reliant on contracted freight and typically only really use spot rates during high important volume periods such as summer/pre-Holiday.” Related: Oil prices pare gains after drone attack kills U.S. troops, escalating Mideast crisis But BMO notes that the Red Sea disruption “clearly adds risk” for Dollar Tree Inc.
DLTR,
+0.38%
and expectations for the company’s additional $1 in freight-related benefits in 2024. “We estimate 10-15% exposure to spot markets for DLTR as the company has shifted more towards longer-term contracts,” wrote Bania. Chef’s Warehouse Inc.
CHEF,
-0.44%
imports European specialty foods, and may experience product delays and cost pressures, according to BMO, which adds that the company managed these issues well through the pandemic. Last week Wells Fargo warned that Dollar Tree is at risk from Red Sea disruption. “Exposure varies across our coverage, but names with high unit velocity (dollar stores) and high discretionary mix (ocean imports) are most at risk,” wrote Wells Fargo analyst Edward Kelly. “This places DLTR in the cross-hairs of another key industry issue.” Related: These retail stocks could be exposed to Red Sea disruption, say analysts Dollar Tree shares are up 20.8% in the last three months, while Target Corp.
TGT,
+0.25%
stock is up 31.2%. Walmart Inc.’s
WMT,
+0.88%
stock is up 0.8% over that period, while Costco is up 23.8% and Dollar General Corp.
DG,
+0.43%
is up 11.3%. Shares of Chef’s Warehouse are up 74.6% in the last three months. Since November, there have been dozens of attacks on cargo ships in the region from Houthi-controlled Yemen. On Friday the Bermuda-owned merchant ves …
Article Attribution | Read More at Article Source
However, BMO said it believes that Costco Wholesale Corp.
COST,
+1.03%
is not currently experiencing disruption to date. “They generally are reliant on contracted freight and typically only really use spot rates during high important volume periods such as summer/pre-Holiday.” Related: Oil prices pare gains after drone attack kills U.S. troops, escalating Mideast crisis But BMO notes that the Red Sea disruption “clearly adds risk” for Dollar Tree Inc.
DLTR,
+0.38%
and expectations for the company’s additional $1 in freight-related benefits in 2024. “We estimate 10-15% exposure to spot markets for DLTR as the company has shifted more towards longer-term contracts,” wrote Bania. Chef’s Warehouse Inc.
CHEF,
-0.44%
imports European specialty foods, and may experience product delays and cost pressures, according to BMO, which adds that the company managed these issues well through the pandemic. Last week Wells Fargo warned that Dollar Tree is at risk from Red Sea disruption. “Exposure varies across our coverage, but names with high unit velocity (dollar stores) and high discretionary mix (ocean imports) are most at risk,” wrote Wells Fargo analyst Edward Kelly. “This places DLTR in the cross-hairs of another key industry issue.” Related: These retail stocks could be exposed to Red Sea disruption, say analysts Dollar Tree shares are up 20.8% in the last three months, while Target Corp.
TGT,
+0.25%
stock is up 31.2%. Walmart Inc.’s
WMT,
+0.88%
stock is up 0.8% over that period, while Costco is up 23.8% and Dollar General Corp.
DG,
+0.43%
is up 11.3%. Shares of Chef’s Warehouse are up 74.6% in the last three months. Since November, there have been dozens of attacks on cargo ships in the region from Houthi-controlled Yemen. On Friday the Bermuda-owned merchant ves …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]