Nomura Securities on Retailing/Specialty Stores: December Mall Checks - A Strong Finish
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Nomura Securities on Retailing/Specialty Stores: December Mall Checks - A Strong Finish
Nomura analyst, Paul Lejuez, said, "After a soft first half of Dec (hurt by pull forward of sales on Black Friday in Nov and unseasonably warm weather), we saw a strong pick-up in sales in the back half of the month. ICSC data reflect this, with the 2-year trend accelerating from +6.4% and +6.0% in wks 1 and 2 to +8.8% and +9.3% in wks 3 and 4. Mall traffic data also support this assertion, +13% y/y in the wk ending 12/24 (helped by the extra shopping day) vs. down 7% LY (Dec MTD is down 2% vs. down 3% LY). We believe trends in wk 5 were also good, though the wk was hurt by the loss of Xmas Sun."
"Promotions remained elevated through the final weeks of the month, though post-Xmas sales (for the most part) did not seem to ratchet up as much as we had expected. The most promotional retailers post-Xmas (and also those with the most inventory), were J.C. Penney (NYSE: JCP), Anthropologie (Nasdaq: URBN), Chicos (NYSE: CHS), and Talbots (NYSE: TLB) and we believe these retailers face a risk to their margin plans."
"Spring in December: Gap Brand (NYSE: GPS), American Eagle (NYSE: AEO), Ann Taylor Stores (NYSE: ANN), and Loft displayed the most new spring transition merchandise. While they are unlikely to sell much of this merchandise in Dec, it is typically a good sign that the retailer was able to clear enough winter inventory to make room for new items. We believe AEO’s women’s merchandise is most improved."
"We continue to believe that companies with momentum going into the
month performed well in Dec, with Macy's (NYSE: M) and Limited (NYSE: LTD) our top picks. At M, after years of playing defense, it is just starting to operate strategically and we expect continued upside to estimates. At LTD, we believe domestic momentum and int’l growth will generate increasing top-line growth and margin gains, resulting in strong earnings growth."
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Nomura analyst, Paul Lejuez, said, "After a soft first half of Dec (hurt by pull forward of sales on Black Friday in Nov and unseasonably warm weather), we saw a strong pick-up in sales in the back half of the month. ICSC data reflect this, with the 2-year trend accelerating from +6.4% and +6.0% in wks 1 and 2 to +8.8% and +9.3% in wks 3 and 4. Mall traffic data also support this assertion, +13% y/y in the wk ending 12/24 (helped by the extra shopping day) vs. down 7% LY (Dec MTD is down 2% vs. down 3% LY). We believe trends in wk 5 were also good, though the wk was hurt by the loss of Xmas Sun."
"Promotions remained elevated through the final weeks of the month, though post-Xmas sales (for the most part) did not seem to ratchet up as much as we had expected. The most promotional retailers post-Xmas (and also those with the most inventory), were J.C. Penney (NYSE: JCP), Anthropologie (Nasdaq: URBN), Chicos (NYSE: CHS), and Talbots (NYSE: TLB) and we believe these retailers face a risk to their margin plans."
"Spring in December: Gap Brand (NYSE: GPS), American Eagle (NYSE: AEO), Ann Taylor Stores (NYSE: ANN), and Loft displayed the most new spring transition merchandise. While they are unlikely to sell much of this merchandise in Dec, it is typically a good sign that the retailer was able to clear enough winter inventory to make room for new items. We believe AEO’s women’s merchandise is most improved."
"We continue to believe that companies with momentum going into the
month performed well in Dec, with Macy's (NYSE: M) and Limited (NYSE: LTD) our top picks. At M, after years of playing defense, it is just starting to operate strategically and we expect continued upside to estimates. At LTD, we believe domestic momentum and int’l growth will generate increasing top-line growth and margin gains, resulting in strong earnings growth."
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