Nomura: 'Growing Divide' Between Apparel And Non-Apparel Companies

Simeon Siegel of Nomura commented in a note on Monday that there is a "growing divide" between apparel and non-apparel specialty retailers.

According to Siegel, retail sales have "enjoyed a lift" despite a challenged third quarter and an ongoing promotional-heavy sales environment. The analyst adds that retailers have benefited recently from better inventory positioning, positive November commentary, cheaper oil, favorable macroeconomic data and a growing interest in the space.

"That said, there has been a growing dichotomy between the performance of our apparel and non-apparel retailers, with the most important part of the year yet to begin," Siegel wrote. "On the positive side, non-apparel companies to buck traffic declines."

As such, Siegel recommends owning shares of Michael Kors Holdings Ltd KORS which are trading at "compelling" levels. The analyst also notes that Signet Jewelers SIG is one of the most attractive multi-year retail companies within the entire retailing segment.

Estimate Changes

Abercrombie & Fitch Co.'s ANF price target was lowered to $35 from a previous $48. The company's fiscal 2014 EPS estimate was lowered to $1.67 from a previous $2.25; Fiscal 2015 EPS estimate was lowered to $1.92 from a previous $2.97.

Aeropostale Inc's ARO fiscal 2014 EPS estimate was raised to $0.58 from a previous $0.53; fiscal 2015 earnings per share estimate was raised to $0.69 from a previous $0.68.

Ann Inc's ANN fiscal 2014 EPS estimate was raised to $1.70 from a previous $1.60; fiscal 2015 EPS estimate lowered to $1.98 from a previous $1.99.

Buckle Inc's BKE fiscal 2014 EPS estimate was lowered to $2.75 from a previous $2.80; fiscal 2015 EPS estimate was lowered to $2.98 from a previous $3.12.

Gap Inc's GPS price target was lowered to $40 from a previous $43; fiscal 2014 EPS estimate lowered to $1.67 from a previous $2.25; fiscal 2015 EPS estimate lowered to $1.92 from a previous $2.97.

L Brands Inc's LB fiscal 2014 EPS estimate raised to $3.36 from a previous $3.34; fiscal 2015 EPS guidance remains at $3.63.