Wedbush On Retail Softline Channel Checks

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Wedbush released a research note on retail softlines Sunday with pre-Christmas channel checks.

Analyst Morry Brown noted that Lululemon Athletica Inc. LULU and the Old Navy brand of Gap Inc GPS “remain traffic winners” with “some signs of low inventory at both” companies.

“Post Black Friday, our checks indicate positive read-through at LULU given (1) reduced clearance items following response to Black Friday weekend, with follow through post-Black Friday, (2) popular gifting items and (3) high level of traffic compared to peers,” according to Brown.

Michael Kors Holdings Ltd KORS and Kate Spade & Co KATE handbags were “hot gift items again this year, but we believe margins will likely suffer given the increased amount of inventory discounted YOY, and are concerned that it will be difficult to sell handbags at full price going forward.”

Brown continued to be “impressed with traffic” at Nordstrom, Inc. JWN and Macy's, Inc. M and believed “the expansive amount of deals is taking traffic away from specialty retailers. Accessories cosmetic gift offerings, and athletic apparel and footwear were the busiest categories. Despite a strong showing for holiday, we are concerned that Nordstrom will struggle shifting back to a full-price model in 2015.”

The analyst note cited weak sell-through for Coach Inc COH with aggressive handbag promotions including 50 percent off at outlets and an additional 40 percent off clearance items.

 

Shares of Kate Spade & Co were the worst performing of the group Monday and recently traded at $29.45, down 1.16 percent.
 



 

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Posted In: Analyst ColorApparel, Accessories & Luxury GoodsConsumer DiscretionaryDepartment StoresMorry BrownWedbush
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