We recently compiled a list of the 10 Footwear Apparel Stocks Affected By China Tariffs. In this article, we are going to take a look at where Warby Parker Inc. (NYSE:WRBY) stands against the other footwear apparel stocks.
Donald Trump’s sweeping tariffs on China, Mexico, and Canada have caused a lot of footwear and apparel stocks to crash. Even though the President paused tariffs on Canadian and Mexican goods for a month, the 10% tariffs on China are still in place.
Fashion brands provide an interesting investment opportunity. Due to their loyal following, they have the ability to raise prices to take care of tariffs. In a similar way, these brands have become quite agile in diversifying their supply chain since the pandemic, so sourcing products from outside China is also a possibility for many. More than these brands, it is the retailers that will get hurt as their value proposition to their customers may get hurt when brands raise prices. However, these retail stocks are not a part of our discussion for now.
In order to come up with our list of 10 stocks affected by Trump’s tariffs on China, we only considered stocks with a market cap of at least $1 billion and a product sourcing mix exposure to China of at least 5%.
A woman wearing a stylish pair of eyeglasses walking through a shopping center.
Warby Parker Inc. (NYSE:WRBY)
Warby Parker Inc. is an eyewear products provider that offers sunglasses, blue-light-filtering lenses, contact lenses, eyeglasses, light-responsive lenses, and non-prescription lenses. The company supplies its products through its websites, retail stores, and mobile apps. It sources 29% of its products from China.
Evercore ISI’s analyst Mark Mahaney downgraded the company just last month from Outperform to In-Line as he thinks the risk/reward associated with the stock is less attractive now. Analysts anticipate WRBY to profit from e-commerce gains, increased EBITDA margins, and improved customer growth over the next 1-2 years in a recovering eyewear market. Despite this, the expected pace of this recovery isn’t very attractive for shareholders.
Regardless of the challenging environment, WRBY’s growth drivers remain solid and the management did a good job. With the company’s stock price gaining over 100% in the past year and analysts’ expectations about the gradual recovery, the company presents an attractive long-term investment opportunity.
Overall WRBY ranks 4th on our list of the footwear apparel stocks affected by China tariffs. While we acknowledge the potential of WRBY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as WRBY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
