Barclays on U.S. Retail Softlines: Initiating Coverage of Retail Softlines
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14 Buy, 23 Hold, 5 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
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Barclays on U.S. Retail Softlines: Initiating Coverage of Retail Softlines
Analyst, Stacy Pak, said, "We initiate coverage of the U.S. Retail Softlines industry with a Neutral rating, as we forecast a 12% return for the industry in 2011, in line with our strategist's call on the market."
"We initiate coverage of 18 stocks. We see the best appreciation potential from our Overweight stocks: Abercrombie (NYSE: ANF), Ann Taylor (NYSE: ANN), Aeropostole (NYSE: ARO), bebe (NYSE: BEBE), Express (Nasdaq: EXPR), Gap Inc (NYSE: GPS), Children's Place (Nasdaq: PLCE), and Urban Outfitters (Nasdaq: URBN). We rate American Eagle (NYSE: AEO), Chico's (NYSE: CHS), Pacific Sun (Nasdaq: PSUN), Ross Stores (Nasdaq: ROST), RUE and T J Cos (NYSE: TJX) Equal Weight. Our Underweight stocks are lululemon (Nasdaq: LULU), Limited (NYSE: LTD), Talbots (NYSE: TLB) and Zumiez (Nasdaq: ZUMZ)."
"The industry's financial metrics look somewhat stretched. 44% of companies in our coverage universe are within 90% of their five-year high productivity levels, and comparisons become tougher going forward on a one-, two- and three-year basis. All but three of our companies are within 20% of trough SG&A per square foot levels, suggesting costs have pretty much been cut to the bone..."
"Unemployment remains stubbornly high, energy costs are a headwind, food prices are on the rise, and housing remains constrained..."
"However, despite these macro concerns, same-store sales have been positive for 19 consecutive months (the last negative monthly comp for the industry was in August 2009), and retailers have exceeded same-store-sales expectations in six of the past eight months, suggesting the consumer might be in better shape than we think...We also believe some of our covered companies have meaningfully improved their business models (ANF, ANN, EXPR and PLCE), and some have adequately discounted the bad news (ARO, BEBE, GPS and URBN)."
Analyst, Stacy Pak, said, "We initiate coverage of the U.S. Retail Softlines industry with a Neutral rating, as we forecast a 12% return for the industry in 2011, in line with our strategist's call on the market."
"We initiate coverage of 18 stocks. We see the best appreciation potential from our Overweight stocks: Abercrombie (NYSE: ANF), Ann Taylor (NYSE: ANN), Aeropostole (NYSE: ARO), bebe (NYSE: BEBE), Express (Nasdaq: EXPR), Gap Inc (NYSE: GPS), Children's Place (Nasdaq: PLCE), and Urban Outfitters (Nasdaq: URBN). We rate American Eagle (NYSE: AEO), Chico's (NYSE: CHS), Pacific Sun (Nasdaq: PSUN), Ross Stores (Nasdaq: ROST), RUE and T J Cos (NYSE: TJX) Equal Weight. Our Underweight stocks are lululemon (Nasdaq: LULU), Limited (NYSE: LTD), Talbots (NYSE: TLB) and Zumiez (Nasdaq: ZUMZ)."
"The industry's financial metrics look somewhat stretched. 44% of companies in our coverage universe are within 90% of their five-year high productivity levels, and comparisons become tougher going forward on a one-, two- and three-year basis. All but three of our companies are within 20% of trough SG&A per square foot levels, suggesting costs have pretty much been cut to the bone..."
"Unemployment remains stubbornly high, energy costs are a headwind, food prices are on the rise, and housing remains constrained..."
"However, despite these macro concerns, same-store sales have been positive for 19 consecutive months (the last negative monthly comp for the industry was in August 2009), and retailers have exceeded same-store-sales expectations in six of the past eight months, suggesting the consumer might be in better shape than we think...We also believe some of our covered companies have meaningfully improved their business models (ANF, ANN, EXPR and PLCE), and some have adequately discounted the bad news (ARO, BEBE, GPS and URBN)."
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