We believe the trio of CPRI brands resonates with each of their respective target markets and provides both product and geographic diversity across the portfolio. This diversification will lower CPRI’s business risk over the longer-term once they successfully integrate the acquisitions. Additionally, each brand’s category expertise provides significant opportunity for product extensions to drive growth. While FY20 is an investment year, the market share and operating leverage opportunities should be evident in FY21 and beyond. We believe in the strength of the luxury segment and CPRI’s brand portfolio and believe shares are undervalued for a multi-year horizon investor.
Search Coverage List, Models & Reports
Search Results11-20 out of 1021
AMC on 5/23/19, ROST reported EPS of $1.15 vs. Cons of $1.12 on a reported +2% comp vs. Cons of +2%, which was driven by an increase in the average basket. The company noted that similar to last quarter men’s outperformed while ladies underperformed during the quarter. The company missed on gross margin by 20 bps vs. Cons of 28.8%. The company beat on SG&A vs. Cons by 40 bps but deleveraged 40 bps YoY. The company repurchased 3.4M shares during the quarter for $320M and remain on track to buy back a total of $1.275B for the year. Over the long-term we still believe the off-price model will continue to be successful and thus remain at an Outperform. Shares traded down 3% in after-marketing trading.
AMC on 5/22/19, LB reported 1Q19 earnings beat but provided weak 2Q19 guidance despite raising the low-end of their FY19 EPS guidance. Bath & Body Works reported a +13% comp vs. Cons of +5.2% and an increase in their merch margin, while VS reported a -5%, in-line with Cons of -4.9%, and a continued decline in their merch margin with ongoing struggles as the PINK fared worse than VS brand. Clearly, BBW continues to outperform while uncertainty remains with resurrecting VS. Even with a product overhaul for fall, we see little to no visibility on customer uptake at this point. With a cheap valuation deep value investors may find LB of interest; however, we have little to no evidence of sustained change at VS, we remain sidelined. We look for improved VS’ gross margin before becoming more optimistic since full-price selling means consumers are returning and product is resonating. In reaction to the beat, LB shares were up 14% in early-morning trading.
Wolfe Research's Senior Consumer Research Analyst, Adrienne Yih, hosted a webcast to discuss the impact of tariffs on retail sector, industries most susceptible to margin erosion, what it will do to operating margins, how retailers can mitigate impact, and Adrienne's QuikCalc TariffModel for any retailer.
The quarter commentary brought a clear shift in strategy with FY19 as a year of investments: 1) new subscription business Nuuly, 2) new furniture distribution center in early fall, 3) new European home office in 3Q19, 4) construction of a new distribution facility in Europe, and 5) incremental talent for China T-mall local launch. During investment phases, companies face heightened business risk and results become extremely sensitive to deleverage risk. As such, shares often languish. Trading at 10x NTM P/E, near valuation lows, URBN reflects the uncertainty and risk that accompanies an investment year. With investments to build a robust 360 degree platform, we maintain our Outperform, although concede trading is likely rangebound until there is proof of concept and positive ROI on the new initiatives. Shares trading -7% in reaction.
Reiterate Peer Perform. JWN missed big on sales this quarter with sales totaling $3.44B vs. Cons of $3.57B. The company noted this was due to three different issues: loyalty, digital marketing and merchandise. Although the loyalty issue sounds temporary, increased digital spend to drive traffic is permanent and it will take a few quarters for the company to rebalance their merchandise mix. Added to these operational stumbles is the margin-eroding shift to e-commerce over the longer-term that JWN must navigate. Given these circumstances, we remain Peer Perform.
Another quarter taking share and building customer loyalty. Merch margins were down due primarily to higher freight expenses, which are likely to abate towards the 2H19. Despite imperfect spring weather, Marmaxx continued to take share from these on-mall share donors. While the new generation of shoppers shuns the tired on-mall experience, when presented with compelling value (defined as quality for price), shoppers will frequent a brick-and-mortar store. We further note that the e-commerce channel has ~75% unique product from the stores, significantly reducing cannibalization risk. With strong cash flow, increased dividends and share repurchases, and one of the highest ROICs in retail, we reiterate OP.
This custom model provides a template for calculating the impact of a 25% tariff on goods from China imported into the U.S. including average unit cost increase, margin hit in basis points, earnings reduction and average unit retail necessary to offset tariff impact.
Use our Tariff QuikCalc Model (click here) to quickly calculate the impact to a retailer's cost, margins, earnings, and, most importantly, to determine the percent increase in prices needed to offset the tariff. We have done this work for our coverage universe, but this is only a small sample of the retailers, vendors, and manufacturers impacted. Therefore, we developed a "quick and dirty" model to give you a general sense of the impact. For the average specialty retailer, we estimate an average unit cost increase of 4.2%, which if entirely unmitigated through price increases results in an average earnings reduction of 35%. The average unit price increase necessary to offset the higher tariff is 2.1%.
PLCE beat on comp, GM, taxes, but missed big on SGA largely due to incentive comp. PLCE reported 1Q19 Adjusted EPS of $0.36 vs Cons for LPS of ($0.48). Comps came in at -4.6% vs Cons. -7.8%. Despite May QTD store comps running -20% vs +24% LY, 2Q19 guidance brackets Cons. FY19 EPS guide increased ~9% above Cons and embeds lowered 2H19 expectations, removing a hurdle for many investors.