Retailers issue warnings about the business consequences of Russia's invasion of Ukraine.

• Some retailers, such as Victoria's Secret, are cautioning about the effects of the Ukraine crisis on their businesses. In contrast, companies like Nike have halted their operations in Russia.
• A Nike spokeswoman stated that the company is deeply concerned about the crisis in Ukraine and that their thoughts are with those affected, including their employees, partners, and their families in the region.
• The main worry for retailers, according to analysts, is the length of time the conflict and its uncertainties persist.

Retailers are focusing on rising inflation and global supply chain strains during the post-holiday earnings season. However, Russia's invasion of Ukraine, which began its second week on Thursday, is also being discussed with analysts and investors.

Several retailers have temporarily stopped their operations in Russia, either as a statement of corporate opposition to the war or because they are unable to conduct business in the country due to sanctions affecting logistics.

Some are warning that the uncertainty created by the war could negatively impact business in the first quarter and possibly beyond.

The duration of the crisis is likely the biggest concern for many retailers, according to Chuck Grom, an analyst with Gordon Haskett.

"As time goes on, the situation becomes increasingly problematic for the consumer," Grom stated.

Retailers are currently attempting to forecast future demand in uncertain circumstances while maintaining stocked shelves without overordering merchandise. Meanwhile, businesses are attempting to entice consumers to return to their stores as Covid cases decline and immunity rates rise. However, this may be more challenging than it was a year ago when President Joe Biden and Congress approved stimulus payments to families.

American Eagle, a Pittsburgh-based clothing retailer, stated on Wednesday that it is taking the ongoing conflict between Russia and Ukraine into account when forecasting its outlook for the year. However, the company did not provide specifics on the potential financial impact of the war on consumer demand. American Eagle operates no physical stores outside of North America and Hong Kong, but it ships its merchandise to 81 countries.

Michael Mathias, the Chief Financial Officer of the retailer, stated on an earnings conference call that the company is aware of several factors affecting its operations, including rising inflation, the impact of stimulus payments on American Eagle's sales, and ongoing disruptions in the global supply chain, particularly due to the war in Ukraine.

Mathias stated a cautious view amidst the backdrop.

American Eagle expects its earnings to decline in the first half of the year compared to the previous year, mainly because of increased freight costs. However, the company anticipates a rebound in earnings in the second half.

Victoria's Secret, a lingerie retailer with a small presence in Russia, mentioned the war in a slight way when reporting its fiscal fourth-quarter results on Wednesday. The company stated that inflation and "global unrest" will create a challenging environment in the coming months. Despite this, Victoria's Secret issued a disappointing outlook for the first quarter but believes the third quarter will be an inflection point for better results.

During a conference call with analysts on Tuesday, Michelle Gass, the Chief Executive, was questioned about the impact of the situation in Ukraine on the department store chain's business.

Gass stated on the call that they anticipated an uncertain environment and considered it while guiding this year. They will remain attentive and adaptable.

Retailers shut stores and make contingency plans

The ongoing supply chain headaches and skyrocketing oil prices could significantly impact American consumers, with companies likely bearing greater burdens. As a result, price increases may be passed on to customers.

The National Retail Federation's senior vice president of government relations, David French, stated that the interruption and disruption in energy markets due to higher energy costs have implications for U.S. retailers. Additionally, he noted that Ukraine and Russia, as major agricultural regions, have implications for U.S. retailers in food prices.

He stated that the biggest first-order effects are likely to be experienced by U.S.-based retailers with minimal exposure to Russia and Ukraine. Although he mentioned that Ukraine is a major hub for IT outsourcing, he warned that this could become a larger issue if the crisis continues.

Despite the pandemic, consumers' confidence has decreased, but they continue to shop as if it were high. Despite inflation and the omicron variant, holiday retail sales in 2021 increased by 14.1% compared to the previous year, according to NRF.

Simeon Siegel, a BMO Capital Markets analyst, stated that although it reveals something about humanity, people tend to ignore problems until they directly affect them.

Companies have promptly expressed their opposition to the Kremlin's invasion of Ukraine.

Ikea announced on Thursday that it will shut down all its stores in Russia, cease production in the country, and halt all imports and exports to and from Russia and Belarus.

Ikea has temporarily paused its operations in Russia due to the war's significant human impact and disruptions to supply chain and trading conditions, as stated by the company.

Both H&M and coat maker have announced that they are halting sales in Russia.

Nike's website in Russia states that the company cannot guarantee product delivery at the moment due to the rapidly changing circumstances and increased operational difficulties. A Nike spokesperson informed CNBC that the company has decided to temporarily halt its operations in the region due to these challenges.

The crisis in Ukraine is deeply troubling us, and our thoughts are with all those affected, including our employees, partners, and their families in the region, the spokeswoman stated.

TJX, the parent company of off-price retailers Boohoo and Asos, has announced that it will sell its 25% stake in the low-cost Russian apparel retailer Familia, which has more than 400 stores in Russia. This sale may result in impairment charges for TJX.

Craig Johnson, founder of CGP, a retailer consulting group, stated that retailers and brands with a presence in central and eastern Europe are likely to have already developed or implemented contingency plans.

Johnson emphasized the importance of contingency plans for in-store and back office employees, as well as plans for physical and cyber security, vendor and public communications, and adjusting merchandise receipts as necessary.