Investors are responding rather strongly to reports of a new COVID variant of concern the WHO designated “Omicron” on Friday. But the former Walmart CEO Bill Simon is confident it doesn’t pose much of a threat for the retail sector in the short term.
Simon’s remarks on CNBC’s ‘Closing Bell’
Bill expects consumer strength and holiday season to help the retail sector absorb this news with minimal reaction. On CNBC’s “Closing Bell”, he said:
People were out shopping today, looking for deals. Stores were crowded, prices were very good and aggressive, particularly in the big-box chains. So, in the short run, with the Black Friday weekend and everything else going on, I don’t think you’ll see much of a reaction.
He refrained from commenting on the long-term impact of the new variant on the retail sector and said it would depend on how the situation unravels. The SPDR S&P Retail ETF is down more than 3.0% on Friday.
Retail has been divided into winners and losers
During the same interview, BMO Capital Markets’ Simeon Siegel said the retail sector was no longer moving in unison; the pandemic had split it into winners and losers.
The question is, who has the pricing power versus who saw fewer promotions. All of them will deal with externalities, whether it’s the variant or the supply chain. But what brands actually structurally improved their business through the pandemic; that’s the dynamic.
According to Siegel, the recent earnings season already made this division evident. On the one hand, we had companies like Capri Holdings that jumped about 20% after reporting results for the latest quarter, and on the other, there was Nordstrom that was down the same after its quarterly report.
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