Nomura Securities on Retailers: December Mall Checks - Promos Pick Back Up; Margins a Question Mark
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Rating Summary:
14 Buy, 24 Hold, 5 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities on Retailers: December Mall Checks - Promos Pick Back Up; Margins a Question Mark
Analyst, Paul Lejuez, said, "We believe the strong Black Friday weekend in November pulled forward more business than usual into November, at the expense of the first half of December. ICSC data show this, indicating a deceleration in trends between Black Friday wknd and 12/10. Mall traffic data also supports this assertion, down ~3% December month to date, hurt by warmer than normal temperatures in the first half of the month. This past weekend (the last full weekend before Christmas), the mall was busier than recent weeks, but not frenzied like Black Fri. Offering 40% off everything (including sale items) seemed to be the cost of doing business. This is a bad sign for margins, as promos are likely to intensify this week. We saw storewide 40% off promotions at A&F/Hollister (NYSE: ANF), AE/aerie (NYSE: AEO), Ann Taylor (NYSE: ANN), Loft, Gap brand (NYSE: GPS), Banana Republic, Wet Seal (Nasdaq: WTSLA), and Arden B (Nasdaq: RDEN)."
"Highlights from Store Checks (1) 40% off seems to be the “standard” promotional level. Only a few retailers were more promotional, including PacSun (Nasdaq: PSUN) (BOGO free on denim/fleece and men’s jackets/button downs/thermals), and Aeropostale (NYSE: ARO) ($7 graphic tees, $10 tops, $12 hoodies, and many 50% off promos); (2) Inventories (and promotions) seemed heaviest in outerwear, likely due to softer than expected sales during the warm start to Dec (and we expect promos to pick up this week); (3) Macy’s (NYSE: M) had the strongest traffic of the dept store group; (4) Old Navy’s recent marketing (focus on PJs) did not seem successful, continuing their marketing woes; and (5) Women’s retailers had the least traffic of the stores we saw (ATS, Loft, WH/BM, Lululemon (Nasdaq: LULU), although 4Q is not typically as important a qtr for them."
"Top Picks for December: Macy' (NYSE: M), Limited (NYSE: LTD) - We continue to believe that companies that had momentum going into the month performed well, with M and LTD our top picks. Of the non-monthly reporters, we believe ANF and AEO are outperforming thus far."
Analyst, Paul Lejuez, said, "We believe the strong Black Friday weekend in November pulled forward more business than usual into November, at the expense of the first half of December. ICSC data show this, indicating a deceleration in trends between Black Friday wknd and 12/10. Mall traffic data also supports this assertion, down ~3% December month to date, hurt by warmer than normal temperatures in the first half of the month. This past weekend (the last full weekend before Christmas), the mall was busier than recent weeks, but not frenzied like Black Fri. Offering 40% off everything (including sale items) seemed to be the cost of doing business. This is a bad sign for margins, as promos are likely to intensify this week. We saw storewide 40% off promotions at A&F/Hollister (NYSE: ANF), AE/aerie (NYSE: AEO), Ann Taylor (NYSE: ANN), Loft, Gap brand (NYSE: GPS), Banana Republic, Wet Seal (Nasdaq: WTSLA), and Arden B (Nasdaq: RDEN)."
"Highlights from Store Checks (1) 40% off seems to be the “standard” promotional level. Only a few retailers were more promotional, including PacSun (Nasdaq: PSUN) (BOGO free on denim/fleece and men’s jackets/button downs/thermals), and Aeropostale (NYSE: ARO) ($7 graphic tees, $10 tops, $12 hoodies, and many 50% off promos); (2) Inventories (and promotions) seemed heaviest in outerwear, likely due to softer than expected sales during the warm start to Dec (and we expect promos to pick up this week); (3) Macy’s (NYSE: M) had the strongest traffic of the dept store group; (4) Old Navy’s recent marketing (focus on PJs) did not seem successful, continuing their marketing woes; and (5) Women’s retailers had the least traffic of the stores we saw (ATS, Loft, WH/BM, Lululemon (Nasdaq: LULU), although 4Q is not typically as important a qtr for them."
"Top Picks for December: Macy' (NYSE: M), Limited (NYSE: LTD) - We continue to believe that companies that had momentum going into the month performed well, with M and LTD our top picks. Of the non-monthly reporters, we believe ANF and AEO are outperforming thus far."
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