Warby Parker Shines, Canada Goose Slips: Goldman Sachs Adjusts Ratings On Apparel Sector Giants

Goldman Sachs analyst Brooke Roach revised ratings on Warby Parker Inc. WRBY and Canada Goose Holdings Inc. GOOS ahead of third-quarter earnings.

The analyst writes that they have noticed fluctuating trends in the apparel sector amid a transition from summer to early fall.

However, consumers remain resilient, focusing their spending on brands that offer innovation and newness, adds the analyst.

Roach expects volatility for the remainder of 2024, but early signs, such as falling gas prices and increased consumer discretionary cash flow in the U.S. and Europe, indicate a more positive outlook for 2025.

Easing post-COVID pressures and balanced industry inventory levels are creating better opportunities for brands and vendors, adds the analyst.

The analyst highlights key factors to watch, which include the upcoming U.S. elections and their potential implications for tariffs and geopolitical risks, a shortened holiday season, and challenges posed by early fall weather, including recent hurricanes and unseasonably warm temperatures.

WRBY: The analyst upgraded the stock to Buy from Neutral and raised the price target to $18 from $15.

The analyst writes that they see several promising tailwinds for the business.

The positives include the expansion of insurance partnerships into next year, early signs of growth in the vision care market, and increasing active customer numbers.

These factors, coupled with improved gross profit rates from stronger glasses sales and cost-efficiency efforts in stores, create a clearer path for enhancing fundamentals, adds the analyst.

GOOS: Roach downgraded the stock to Sell from Neutral and lowered the price target to $9 from $11.5.

The analyst writes that they find the risk/reward profile for the company less appealing compared to other companies in the brands and apparel sector.

The bearish outlook reflects heightened competition, signs of normalizing brand momentum and engagement, a slowing global luxury market, and a volatile macroeconomic environment in China.

On the other hand, the analyst is optimistic about GOOS’s strategic initiatives, such as product capsules from the new creative director and management’s emphasis on improving retail execution.

Price Action: WRBY shares are up 5.92% at $17.53, while GOOS shares are down 6.6% at $10.50 at the last check Monday.

Photo: Suteren Studio via Shutterstock

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