{"id":17566,"date":"2023-06-03T03:46:32","date_gmt":"2023-06-03T07:46:32","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/target-and-other-retailers-that-will-be-hit-when-student-loan-repayments-resume\/"},"modified":"2023-06-03T03:46:33","modified_gmt":"2023-06-03T07:46:33","slug":"target-and-other-retailers-that-will-be-hit-when-student-loan-repayments-resume","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=17566","title":{"rendered":"Target and Other Retailers That Will Be Hit When Student Loan Repayments Resume"},"content":{"rendered":"
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Retailers cited concerns about inflation and shrink when they provided their financial outlooks this earnings season, but there was one issue that wasn\u2019t highlighted\u2014student loan repayments.<\/p>\n

At the start of the Covid-19 pandemic, payments were put on hold for federal student loan borrowers, giving them some financial breathing room, but the freeze is about to end. Under the debt-ceiling agreement, payments will resume in late August.<\/p>\n

\n

And while the Biden administration announced last year a plan to eliminate up to $20,000 in federal student-loan debt for qualified borrowers, the Supreme Court must still decide on its legality.<\/p>\n

When payments do resume, it could be an issue for Target (TGT), Best Buy (BBY), Dick\u2019s Sporting Goods (DKS),
\n Ulta Beauty
\n (ULTA), and other retailers, said
\n J.P. Morgan
\n in a note on Friday. \u00a0<\/strong><\/p>\n

The payments could deplete consumer wallets by $10 billion and lead to a roughly 1% negative impact on core retail sales\u2014which excludes restaurants or grocery\u2014in the second half of this year, according to calculations by analyst Christopher Horvers. <\/p>\n

Companies with exposure to Millennial and Gen X customers, which account for roughly 69% of total student loans, are vulnerable, Horvers said. Retailers with exposure to states\u00a0<\/strong>with higher average student loan balances\u2014primarily in the Northeast and Southeast\u2014are also especially at risk.<\/p>\n

\u201cWe don\u2019t believe [the headwind] is contemplated by company guidance or in consensus sales forecasts (including ours),\u201d the analyst said.<\/p>\n

Target,
\n Best Buy,<\/span>
\n Dick\u2019s, and Ulta top Horvers\u2019 list of companies that could be impacted by student loan repayments, given their higher mix of discretionary products.<\/p>\n

\n Academy Sports & Outdoors
\n (ASO), another sports retailer, is in a better position than Dick\u2019s due to its presence in areas with smaller student loan balances, Horvers wrote.\u00a0<\/strong>
\n Walmart
\n (WMT) and
\n Costco Wholesale
\n \u00a0(COST) fall lower on his list given they higher mix of non-discretionary. The least risky are retailers of aftermarket automotive parts such as
\n AutoZone
\n (AZO). <\/p>\n

The concerning backdrop for Target led Horvers to downgrade the stock to Neutral from Overweight Thursday. That came as the retailer faces\u00a0a backlash over Pride Month merchandise\u00a0and\u00a0consumer challenges. Target is down 12% this year. <\/p>\n

He still rates Ulta at Overweight. The beauty retailer\u2019s stock has lost 12% this year after cutting operating margin expectations last month and warning investors of moderating growth. <\/strong>It was Barron\u2019s<\/em> stock pick in February.<\/p>\n

Horvers is on the fence about Best Buy and Dick\u2019s stocks, rating them Neutral.<\/p>\n

Write to Karishma Vanjani at\u00a0karishma.vanjani@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Retailers cited concerns about inflation and shrink when they provided their financial outlooks this earnings season, but there was one issue that wasn\u2019t highlighted\u2014student loan repayments. At the start of the Covid-19 pandemic, payments were put on hold for federal student loan borrowers, giving them some financial breathing room, but the freeze is about to […]<\/p>\n","protected":false},"author":1,"featured_media":17567,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-17566","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nTarget and Other Retailers That Will Be Hit When Student Loan Repayments Resume | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Retailers cited concerns about inflation and shrink when they provided their financial outlooks this earnings season, but there was one issue that wasn\u2019t\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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