Market Overview

Handbag Category 'Somewhat Slow' Post-Christmas; Kate Spade Was A Standout

Handbag Category 'Somewhat Slow' Post-Christmas; Kate Spade Was A Standout
  • While shares of Kate Spade & Co (NYSE: KATE) and Michael Kors Holdings Ltd (NYSE: KORS) lost around 5 percent in the last month, Coach Inc (NYSE: COH) shares are up 10 percent.
  • Wedbush’s Morry Brown maintained an Outperform rating for Kate Spade, and Neutral ratings for Michael Kors and Coach.
  • Interest in handbags remained moderate after Christmas, while overall inventory levels seemed to be better controlled than last year, Brown stated.

“Overall we didn’t see a significant interest in handbags after Christmas as customers focused on better deals found in apparel and shoes,” analyst Morry Brown wrote. He added, however, that overall inventory levels were better controlled than last year. Clearance levels were moderate, and were mostly offered at discounts of 25-40 percent, similar to last year.

Kate Spade: Post-Holiday Traffic

Kate Spade stores witnessed high traffic after Christmas, with customers shopping for clearance items that were being offered at an additional discount of 25 percent, same as last year. While most gift items had sold through, certain stores were left with some glitter wallets and pouches.

“Traffic in stores was called out as a positive from our store visits, especially compared with competitors. Stores were preparing for new spring arrivals expected to hit floors this Thursday,” Brown mentioned.

The price target for the company is at $32.

Michael Kors: Heavy Clearance Levels

Michael Kors stores offered an additional discount of 25 percent on clearance merchandise during the last week of December, same as last year. They also offered an additional 40 percent off on select clearance online.

Stores did not witness high traffic, and clearance inventory remained high after Christmas. “We remain concerned about the brand going forward given the lack of newness with silhouettes and weak traffic in stores,” the analyst said.

The price target for the company is at $48.

Coach: Slow Winter Clearance

Coach continued its end-of-season winter sale, offering discounts of up to 50 percent after Christmas, same as last year. Traffic was lackluster at full price stores, with little interest in clearance or new full-priced Spring merchandise.

“Most stores received the new spring saddle bags in various colors by week five of December, which we think could generate interest in the next few months given the newness with the silhouette and the strength of bohemian styles,” Brown stated.

The price target for the company is at $32.

Posted-In: Morry Brown WedbushAnalyst Color Long Ideas Reiteration Top Stories Analyst Ratings Trading Ideas Best of Benzinga


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