Zacks Industry Outlook Highlights: Gap, Limited Brands, American Eagle Outfitters and The Home Depot - Press Releases

For Immediate Release

Chicago, IL – September 15, 2010 – Today, Zacks Equity Research discusses the Retail Industry, including Gap Inc. (GPS), Limited Brands Inc. (LTD) and American Eagle Outfitters Inc. (AEO), The Home Depot Inc. (HD)

A synopsis of today's Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/40135/Retail+Industry+Outlook+-+Sept.+2010.

Many retail chains have benefited in spite of this tough macro economic environment. In this group, we prefer the following companies:

Gap Inc. (GAP), the largest U.S. clothing chain, delivered solid top-line and earnings results for second-quarter 2010. The company is expected to continue to deliver strong sales as comps comparisons remain easy throughout the year. Gap's size and buying power as compared with other retailers help it to withstand higher costs. Also, the turnaround story in the U.S. has helped the company to build a strong position in order to expand overseas and improve its online reach.

Limited Brands Inc. (LTD), a specialty retailer of women's intimate and other apparel, beauty and personal care products, represents a story with positive same-store sales, margin recovery and strong international growth opportunities. The company has been able to showcase the potential of its brand internationally through various initiatives.

WEAKNESSES

Some of the companies, however, have been more than hit by the lackluster macro-environment. In this group, we discuss American Eagle Outfitters and Home Depot.

American Eagle Outfitters Inc. (AEO) reported an earnings drop of 64.2% in the second quarter of fiscal 2010. Inventory levels remain high and the pricing environment is competitive. High inventory levels as compared with peers are an obstacle to out-performance. However, the company's plan to further expand internationally will help to bolster its growth.

The Home Depot Inc. (HD), one of the world's largest home improvement retailers, reported better-than-expected first-quarter results. However, the company faces fierce competition from various global and regional competitors. Moreover, exposure to adverse foreign currency translations also puts a question mark on the future prospects of the company.

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