×

How Brexit could pose a risk to retail companies

The United Kingdom's departure from the European Union could pose a risk for retail companies doing business in London, Oliver Chen told CNBC's "Squawk on the Street," Tuesday.

"In terms of currency," he said. "Translational risk is a key factor."

In retail, Chen said about 10 percent of revenues are exposed to Europe, which could be a 1 to 2 percent hit to earnings and overall revenues. He pointed to psychological factors like consumer confidence and tourism.

"Tourism has been a problem factor considering a strong dollar," Chen told CNBC.

Tourism-related stocks include Macy's, Tiffany and Hudson's Bay. Chen said to look at domestic U.S. stocks on how to make money in this environment.

But Laurent Vasilescu, analysts at Macquarie Capital, said some of the larger global names have less exposure to the U.K. market, and, therefore less risk.

"For example, Nike, VF Corp that owns Vans and Timberland, Ralph Lauren," he said. "We estimate that about 3 to 4 percent of their revenue come from the U.K. market."