Discount Retailers: Deja Vu or Disaster Waiting to Happen?
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Price: $77.40 -0.6%
Rating Summary:
7 Buy, 13 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 20 | Down: 41 | New: 13
Rating Summary:
7 Buy, 13 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 20 | Down: 41 | New: 13
Trade WMT Now!
2012 has been a blowout year for investors targeting discount retailers. Shares of many companies in the space are near fresh highs, including Wal-Mart (NYSE: WMT) and Ross Stores Inc. (Nasdaq: ROST), while others such as Kohl's Corp. (NYSE: KSS) and Fred’s (Nasdaq: FRED) have struggled. With six companies in the “off-price retail” space reporting monthly sales figures on Thursday, investors will have plenty to digest.
On Monday, analysts at MKM Partners issued a note which suggested the off-price group will have another mixed bag in July despite overall strength in the space. The firm is expecting weak results from smaller names, e.g. Cato (NYSE: CATO), Fred’s.
MKM expects Kohl’s (NYSE: KSS) to show improvement in the back half of the month as consumers began to focus on back-to-school. Still the firm warned numbers may not be stellar because of weakness at the start of the month.
MKM raised comp estimates for Ross and TJX Companies, Inc. (NYSE: TJX). Target (NYSE: TGT) should also show a modest pick-up in sales in July. Analyst Patrick G. McKeever, Jr said Target's back-to-school business is off to a good start and the stores are particularly well positioned in back-to-college merchandise.
“We are raising our July same-store sales estimate for Ross from 2%-3% to 3%-5% to reflect positive store checks... We are raising our July same-store sales estimate for TJX from 1%-3% to 3%-5%, also to reflect our consistently positive store checks,” said McKeever.
Regarding Target, MKM expects a “modest pick-up from June's 2.1% increase against a 40 bps easier comparison, and are maintaining our 2%-4% same-store sales estimate vs. guidance of up low- to mid-single digits.”
In other words, it might be déjà vu in terms of sales. It remains to be seen if valuations will play along...
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On Monday, analysts at MKM Partners issued a note which suggested the off-price group will have another mixed bag in July despite overall strength in the space. The firm is expecting weak results from smaller names, e.g. Cato (NYSE: CATO), Fred’s.
MKM expects Kohl’s (NYSE: KSS) to show improvement in the back half of the month as consumers began to focus on back-to-school. Still the firm warned numbers may not be stellar because of weakness at the start of the month.
MKM raised comp estimates for Ross and TJX Companies, Inc. (NYSE: TJX). Target (NYSE: TGT) should also show a modest pick-up in sales in July. Analyst Patrick G. McKeever, Jr said Target's back-to-school business is off to a good start and the stores are particularly well positioned in back-to-college merchandise.
“We are raising our July same-store sales estimate for Ross from 2%-3% to 3%-5% to reflect positive store checks... We are raising our July same-store sales estimate for TJX from 1%-3% to 3%-5%, also to reflect our consistently positive store checks,” said McKeever.
Regarding Target, MKM expects a “modest pick-up from June's 2.1% increase against a 40 bps easier comparison, and are maintaining our 2%-4% same-store sales estimate vs. guidance of up low- to mid-single digits.”
In other words, it might be déjà vu in terms of sales. It remains to be seen if valuations will play along...
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