Who's Who In Shoe Stocks?

Checks indicate traffic trends in the footwear industry were broadly better during the Black Friday shopping event, Brean Capital’s Eric Tracy said in a report. Tracy noted the checks for the kick-off to the critical holiday shopping season were, however, weighed against last year's very easy comps. He added that valuations now “largely reflect the positives,” given the recent run-up in shares.

The traffic trends were supported by:

1. Generally tight inventory management.
2. More favorable seasonality this year versus 2015.
3. Some pent-up demand that was released post-election.

Checks indicate that while mall and department store traffic was generally positive, mass and athletic were “much more lumpy,” Tracy mentioned.

Deckers Outdoor

Tracy maintains a Buy rating on Deckers Outdoor Corp DECK, with a price target of $65. Checks were “generally positive” for the company, with better traffic trends at retail, improved seasonality in recent weeks and Classic 2.0 launch.

“While markdown cadence was generally a positive (and last year’s 3Q GM down -380 bps should be an easy compare), we note that promotion through Ugg ecomm was somewhat heavier than we had expected, with alternating non-Classic styles (i.e. Bailey bow) 30 percent off between 11/24–11/27,” the analyst pointed out.

VF Corp

Brean Capital has a Hold rating and a $58 price target on VF Corp VFC. Checks showed mixed signals, with “relatively clean inventory positioning/ markdown cadence in Van’s (particularly classic) styles and Timberland more than offset by a warmer start to the Holiday selling season that dragged on sales of outerwear,” Tracy noted.

Under Armour

The analyst maintains a Hold rating on Under Armour Inc UA, with a price target of $33. Checks in athletic retailers as well as department store channels indicated a 25-30 percent markdown cadence on apparel.

Tracy added, however, that inventory levels had improved significantly year-over-year.

PVH Corp

Tracy maintains a Buy rating on PVH Corp PVH, with a price target of $124. He wrote, “Department stores we visited showed broad-based improvement y/y in both traffic and conversion, and this (taken together with better inventory positioning heading into the season) likely drives lower markdown cadence against last year’s easy compares.”

The analyst named PVH has among the top picks, saying that the price target represented nearly 15 percent upside from current levels.

At Last Check

• Deckers closed Friday's trading session at $63.85.
• PVH Corp closed Friday trading slightly up at $108.69.
• Under Armour was slightly down by 0.03 percent in Monday's pre-market, trading at $30.59.
• VF Corp closed Friday trading at $57.26.