Jefferies & Company’s Monthly Consumer Retail Report (AEO, ANF, ZUMZ)

Jefferies & Company is out with their monthly consumer research report, where it takes a look at recent same store sales data performance, next months SSS expectations, and what it all means for stocks in its coverage space.

The analysts noted that, continuing from their positive comments last month, after being negative since the April market peak, they are now getting increasingly more constructive on the Specialty Retail names given that valuations are low, expectations muted, and sentiment negative.

The analysts added that, heading into the August sales results, they would be buyers of the teen names, such as American Eagle Outfitters (NYSE: AEO),
Abercrombie & Fitch Co. (NYSE: ANF), and Zumiez Inc. (NASDAQ: ZUMZ) and sellers of the off-price retailers, such as Ross Stores, Inc. (NASDAQ: ROST) and The TJX Companies, Inc. (NYSE: TJX).

The Jefferies analysts noted that, “with "need" based spending now picking up with back-to-school season coupled with low valuations, we think now is the time to dip some toes back into the space on near-term basis. In particular, we like teen retail risk/reward given spending trends should improve the most during the back-to-school period.”

With that said, they are still not positive on the off-priced retailers, seeing them at a cyclical peak, with fundamentals and comps daunting.