Here's All Of CLSA's Ratings On Specialty Retail
Initiating coverage on the specialty retail, luxury and apparel sectors, CLSA said it is a dog's fight for dollars, as categories decelerate or shrink, each for different reasons.
Analyst Rick Patel noted that the U.S. consumers are alive and kicking, with the jobless rate holding steady at a five-year low of 4.9 percent and consumer confidence ticking up for the past five years. Notwithstanding, the analyst noted that savings rate, despite rising modestly in the year-to-date period, is still flat. Gas prices have also pulled back notably, the analyst noted.
Shopping Trends Not Reflecting Vibrancy
CLSA noted that mall traffic has been down year-over-year for several years despite the sound consumer fundamentals. The firm attributed the weakness to increasing shift towards e-commerce amid the mobile commerce revolution. Even after the e-commerce channel is included, the firm noted that most retailers in its coverage universe are experiencing comp declines.
Off-Price Gained, Specialty Apparel Pained
While suggesting that the companies are seeing sequential weakness, CLSA noted that off-price stores are outperforming. On the other hand, specialty apparel retailers, especially those targeting teens, are going through the most pain.
- Accessories & handbag retailers have seen their growth slowing from single-digits to flattish trend, as increasing promotion and shift toward smaller, less costly bags weigh. Increased focus on quality of sales, according to CLSA, can help improve average ticket.
- CLSA stated that luxury retailers are facing the heat of a firmer dollar through lower tourism and forex translations.
- Jewelry, though remaining resilient in the past, has slowed to flattish growth in 2015. CLSA expects growth to decline in 2016, with commodity weakness blamed for it.
- Apparel retailers have been the long sufferers as pricing deflation and struggling comps stifle them.
Ratings, Target Prices
- Coach Inc (NYSE: COH): Buy/$45.
- Ralph Lauren Corp (NYSE: RL): Buy/$125.
- G-III Apparel Group, Ltd. (NASDAQ: GIII): Outperform/$34.
- Kate Spade & Co (NYSE: KATE): Outperform/$21.
- Oxford Industries Inc (NYSE: OXM): Outperform/$78.
- Signet Jewelers Ltd. (NYSE: SIG): Outperform/$87.
- Tiffany & Co. ( (NYSE: TIF): Outperform/$80.
- Carter's, Inc. ( (NYSE: CRI): Underperform/$95.
- Michael Kors Holdings Ltd( (NYSE: KORS): Sell/$45.
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