Outperform Ratings
The firm rates the following retail stocks at Outperform:- TJX Companies Inc TJX
- Tiffany & Co. TIF
- Lululemon Athletica inc. LULU
- Michael Kors Holdings Ltd KORS
Market-Perform Ratings
On the other hand, the experts believe the following retailers deserve a rating of Market-Perform:
- Ross Stores, Inc. ROST
- L Brands Inc LB
- Gap Inc GPS
- Coach Inc COH
A Closer Look At Retail Behemoth Macy's
Macy’s recent third-quarter earnings call threw the retail space off balance again, especially with its comparable store sales down 3.6 percent. The company said the weak traffic was driven by a marked decline in international tourism in the United States, warm weather over the country and a shift in consumer spending towards other categories like autos and technology.
Bernstein retail index unperformed the S&P500 by roughly 200 bps, the research note assured, explaining that the poor performance was broad-based, and has led investors to expert “more misses and bad news going into the balance of retail earnings.”
Below are a few quick comments from Bernstein analysts in relation to this pullback:
- The consumer is (still) shifting away from department stores in the apparel segment, and moving towards two value segments: fast fashion and off-price.
- The consumer is in a pretty good position, as evidenced by consumption of discretionary brands like Victoria's Secret or L Brands.
- “However price / value expectations, especially when it comes to apparel, keep being challenged and redefined by value players.”
- “Warm weather” does not rank among the top fundamental drivers for Bernstein.
- Going into the second half of the year, the experts feel bullish on the off-price segment.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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