UBS on U.S. Specialty Retail: A Structural Shift To The Off-Pricers: Top Picks for 2012 TJX & ROST
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Price: $140.69 -2.64%
Rating Summary:
36 Buy, 8 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
36 Buy, 8 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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UBS on U.S. Specialty Retail: A Structural Shift To The Off-Pricers: Top Picks for 2012 TJX & ROST
Analyst, Roxanne Meyer, said, "We believe there is a structural shift to off-price occurring as TJX Cos (NYSE: TJX) and Ross Stores (Nasdaq: ROST) have comped +M-HSD over the last few months, outperforming the retail sector. We view off-pricers’ traffic gains as “sticky” and see continued momentum given strong product, compelling value, increased open-to-buy positions and marketing. We see margin expansion occurring from leverage on comps above +LSD, leaner inventory and potential to price goods higher as the industry reduces promotions."
"To appreciate off-pricers’ relative strength, we looked at how market share has shifted among the mid-tier department stores (JCPenney (NYSE: JCP), Macy's (NYSE: M), Kohl's (NYSE: KSS)) and the off-price channel. In 2011, total sales from all five retailers totalled $89B (TJX US and ROST are 30% of the pie), +11% vs. ’08; during that period, sales CAGRs were 8% for TJX (US) and 10% for ROST. Share gains: TJX +3 pts, ROST +2 pts, KSS +1 pts, M -2 pts (though impacted by merger integration), and JCP -4 pts."
UBS raises price target on TJX from $39 to $43 and from $59 to $62 on KSS.
Analyst, Roxanne Meyer, said, "We believe there is a structural shift to off-price occurring as TJX Cos (NYSE: TJX) and Ross Stores (Nasdaq: ROST) have comped +M-HSD over the last few months, outperforming the retail sector. We view off-pricers’ traffic gains as “sticky” and see continued momentum given strong product, compelling value, increased open-to-buy positions and marketing. We see margin expansion occurring from leverage on comps above +LSD, leaner inventory and potential to price goods higher as the industry reduces promotions."
"To appreciate off-pricers’ relative strength, we looked at how market share has shifted among the mid-tier department stores (JCPenney (NYSE: JCP), Macy's (NYSE: M), Kohl's (NYSE: KSS)) and the off-price channel. In 2011, total sales from all five retailers totalled $89B (TJX US and ROST are 30% of the pie), +11% vs. ’08; during that period, sales CAGRs were 8% for TJX (US) and 10% for ROST. Share gains: TJX +3 pts, ROST +2 pts, KSS +1 pts, M -2 pts (though impacted by merger integration), and JCP -4 pts."
UBS raises price target on TJX from $39 to $43 and from $59 to $62 on KSS.
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