Goldman Sachs Neutral On Retail

Goldman Sachs is out with a research report on the retail sector, and it has a Neutral rating on the sector as a whole. It is positive on names like Lululemon LULU, Nordstrom JWN and BJ's Wholesale BJ. In the note, Goldman writes, "We remain Neutral weighted on the retail sector, and advocate a selective stance as the sector's margins and relative valuation remain near peak levels. We recommend a focus on organic growth stories – ANF, DKS, LULU; firms with pricing power – JWN, PETM; and, special situations – BJ. We would avoid stories with margin risk associated with choppy input pricing trends, including GPS and JNY. Our longs offer cyclical exposure, but are tailored to outperform in an environment characterized by level real growth rates and higher inflation."