In a research note released Thursday, FBR & Co. analyst Susan Anderson commented on the specialty retail and apparel industry, she called inventory levels poor but improving, raised the target on ANF ANF, called HBI HBI best positioned, and is concerned with EXPR.
Inventories improved at 1Q14-end with a deceleration to 10.7% growth vs. 13.5% in the fourth quarter of 2013.
The analyst believes that ANF had the most improved inventory levels, and believes that ANF is doing a better job on product.
In addition, the analyst believes that EXPR EXPR had the least favorable inventory change; the primary reason for the weakness was due to a weakness in assortment.
The teen retailers had the most improved inventory spreads, which includes ANF, ARO ARO, AEO AEO.
Sales in the months of May and June tend to be better than expected, as better weather, better mall traffic, and pentup demand tend to drive up sales.
“Improved inventory positions could lead to a more favorable promo environment, though we are still cautious on retailers' ability to quickly pull back on promos on a YOY basis given consumers' apparent reliance on promos.”
Shares of ANF, EXPR, ARO, and AEO are down 1 percent, 1.5 percent, 1.5 percent, and 2.5 percent on Thursday.
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