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Costco, Buckle, L Brands: A Preview Of July's Retail Sales

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Costco, Buckle, L Brands: A Preview Of July's Retail Sales

Deutsche Bank has released several new analyst notes offering its take on gauging the retail sector’s performance in July.

L Brands: Buy Rating, $60 Price Target

Despite L Brands Inc (NYSE: LB)'s recent slowdown, and struggling Victoria's Secret brand, Deutsche Bank analyst Paul Trussell expects to hear positive commentary around merchandise margins and improving retail traffic trends.

“That said, while new product hitting the floors looks improved, we believe it is not enough yet to move the needle and look to August for new product launches,” said Trussell.

July is generally one of L Brands' lowest volume months. Trussell believes that management’s guidance of July same-store sales at -5 percent is achievable.

“We remain constructive as we continue to see green shoots, but we note that monthly trends need to be monitored closely in this challenged specialty retail backdrop, especially as VS continues to test different promotion strategies.”

Deutsche Bank maintains a Buy rating on L Brands with a $60 price target.

Buckle: Sell, $15

While industry data points appear to be improving, and Deutsche Bank raised its July comp forecast by 250 basis points to -5 percent Buckle Inc (NYSE: BKE), the German-based bank maintains a Sell rating on the casual retailer with a $15 price target.

“While the sales trend has been less negative in recent months, longer term we still see EPS declining ~20% in each of the next three years through SSS declines amidst continued merchandising and structural challenges,” said Deutsche Bank analyst Tiffany Kanaga.

Costco: Hold, $172

Deutsche Bank's July preview on Costco Wholesale Corporation (NASDAQ: COST) appeared to be more favorable, with Trussell expecting July headline comps to be up 5.3 percent in the month.

“Momentum has been positive in recent months, with June easily clearing expectations; however, with competition increasing, we remain sidelined and are monitoring membership growth and renewal rates closely.”

Deutsche Bank maintains a Hold rating on Costco with a $172 price target.

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Latest Ratings for LB

DateFirmActionFromTo
Aug 2020MKM PartnersUpgradesNeutralBuy
Aug 2020Morgan StanleyMaintainsEqual-Weight
Aug 2020Credit SuisseMaintainsNeutral

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