Barclays Flags Macy's, Kohl's Risks During Consumer Weakness; Highlights Gildan, Levi's For Strength

Barclays analyst Paul Kearney on Monday initiated coverage on the shares of Gildan Activewear Inc GIL and announced a price forecast of $51.

The analyst initiated coverage on Macy’s Inc M and Columbia Sportswear Co COLM with an Equal Weight rating and announced a price forecast of $12 and $64, respectively.

Kearney also initiated coverage on the shares of Carter’s Inc CRI and Kohls Corp KSS with an Underweight rating and announced a price forecast of $25 and $4, respectively.

While the analyst acknowledges the strength of the U.S. consumer, he remains cautious in the short term due to market turbulence and policy uncertainties impacting consumer and business sentiment.

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The analyst highlights apparel as one of the sectors most vulnerable to tariff policy shifts. Considering the deflationary tendencies of apparel, along with consumer challenges and intense competition, Kearney anticipates a decline in unit sales during the second half of 2025 and the first half of 2026.

Although inventory management among department stores and retailers has normalized throughout 2024, the analyst warns that supply chain risks and weakening consumer demand could prompt retailers to adopt a conservative buying strategy in the second half of 2025.

The analyst expects retailers to prioritize key brands that drive traffic, manage costs effectively and offer better value to shoppers.

Kearney prefers companies that are expanding their direct-to-consumer (DTC) businesses and strengthening brand positioning to support price increases such as Ralph Lauren Corp RL, Kontoor Brands Inc KTB, and Levi Strauss & Co LEVI.

Companies that maintain diversified geographic exposure to help mitigate pricing challenges internationally include Ralph Lauren, Levi and PVH Corp PVH.

Companies that demonstrate operational advantages in sourcing to better handle tariff risks with the likes of Gildan, Kontoor Brands and offer strong free cash flow to equity, providing flexibility to return capital to shareholders, such as Gildan and PVH).

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