Apparel, Footwear Discount Inventories Improving, Says Deutsche Bank (NKE) (COH) (KORS) (LULU) (PVH)

Deutsche Bank maintained a Buy rating on PVH Corp (NYSE: PVH), Nike (NYSE: NKE), Michael Kors Holdings (NYSE: KORS), and VF Corp. (NYSE: VFC). Coach (NYSE: COH), lululemon athletica (NASDAQ: LULU), Perry Ellis International, Inc. (NASDAQ: PERY), Ralph Lauren Corp (NYSE: RL), Tiffany & Co. (NYSE: TIF), and Under Armour (NYSE: UA) remain Hold rated. Comments follow a read on sector discounts and inventories, which showed improvement.

"Today we publish two related reports under separate cover: Discount Tracker & Macro Tracker. In our Discount Tracker, we focus on current sector promotions & invty. trends, which seem to be improving (mid-Aug. YY promos. off May peak & 2Q rev.-invty. spread, so far, turns +). However, this is tempered by our Macro Tracker, which suggests that while global GDP, PMI, unempl., & cons. sentiment remain stable (U.S.(+), China(=), Europe(-)), the U.S. top-line for apparel specifically remains challenged. Net-net, while a rev. recovery takes time (though early BTS read is +), improved prospects for 2H discounting & inventories may give way to more rational selling & improved market sentiment," said analyst Dave Weiner.

"While sector discounting continues up YY, our call today is that broadly speaking for retailers & brands, that promotional cadence looks to be improving. For example, in, our DISCOUNT TRACKER suggests that the growth in YY promotions has steadily decreased in to mid-Aug. In fact, it appears that over the past 30+ days specifically, the industry’s YY promotional cadence began to trend better than at this time last year. Importantly, per, this ‘improving’ viewpoint is also seen by the discounting levels at which promotional SKUs are actually being sold. That is, the avg. ‘% off at which SKUs are priced vs. MSRP’ now sits at 42.7%, which while 240bp more than 2013’s 40.3%, is an improvement from a 530bp gap in May. For our covered Brands, we’ve seen similar improvements, with LULU a positive standout, NKE & UA faring better, & KORS also seeing much improved trends," he added.

For an analyst ratings summary and ratings history on PVH Corp click here. For more ratings news on PVH Corp click here.

Shares of PVH Corp closed at $113.65 yesterday.

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