Nomura Securities on Retailers: Lots of Meetings; Many Common Questions Part II

May 15, 2012 9:27 AM EDT
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Nomura Securities on Retailers: Lots of Meetings; Many Common Questions

Analyst, Paul Lejuez, said, "Over the past several weeks, we have met with many clients. We find that several common themes/questions have come up consistently."

6. How much of the 1Q12 sales upside in retail was simply the weather? It definitely helped. We model 2Q comps below 1Q comps.

7. When thinking about E-commerce, who wins, who loses? We believe the best positioned are those that own the brand. Department stores are at a structural disadvantage.

8. How do European economic concerns affect the group? Abercrombie & Fitch (NYSE: ANF) and Tiffany's (NYSE: TIF) are most at risk. TJX Cos (NYSE: TJX) can actually benefit.

9. What are companies doing with inventories in 2H12? Most are indicating they will be more conservative, though we question what that means. In our view, units should be managed down 5-10%, which would equate to dollars/sq ft down 10-20%.

10. We know what your Buys are (Macy's (NYSE: M), American Eagle (NYSE: AEO), Limited (NYSE: LTD), off-pricers). Which Neutral rated stocks do you like best? Nordstrom (NYSE: JWN), Gap (NYSE: GPS), Aeropostole (NYSE: ARO) and Lululemon (Nasdaq: LULU) - in that order.

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