BTIG sees a 'choppy' H1 followed by a strong H2 for Consumer Retail and Lifestyle Brands firms

BTIG analyst Janine Stichter said in a note Tuesday that she has assumed coverage of retailers Deckers Brands (NYSE: DECK), Revolve Group (NYSE: RVLV), Rocky Brands (NASDAQ: RCKY), and V.F. Corp. (NYSE: VFC) and has initiated initial coverage of Allbirds, Inc. (NASDAQ: BIRD), Boot Barn Holdings (NYSE: BOOT), Duluth Holdings Inc. (NASDAQ: DLTH), Foot Locker (NYSE: FL), Lulu’s Fashion Lounge Holdings (NASDAQ: LVLU), and Warby Parker (NYSE: WRBY).

The analyst said the firm expects the first half to be "challenging and noisy" for consumer retail and lifestyle brands companies.

She initiated coverage of Allbirds, Duluth Holdings, and Warby Parker at Neutral and Boot Barn, Footlocker, and Lulu's Fashion Lounge at Buy. LVLU was assigned a $5 price target, with FL's price target set at $55 per share and Boot Barn's at $110 per share.

Meanwhile, the analyst assumed coverage of DECK at Buy with a $515 price target and RVLV at Buy with a $35 price target. RCKY and VFC were assumed with a Neutral rating.

"We expect the first half to be choppy, as many companies face the concurrent headwinds of challenging compares from the last several years (driven by stimulus, pent-up demand) against the backdrop of a more cautious consumer," said Stichter.

However, the firm is more bullish on the back-half setup as they expect fundamentals to inflect significantly by H2 as "multiple tailwinds are set to coalesce."

These tailwinds include easier top-line comparisons, lower YoY markdown levels as inventory is reset, and multiple cost benefits, including inbound freight, domestic transportation, and raw materials.

"Importantly, we expect a much more stable operating environment than the extremes that characterized the last three years, which should allow management teams to better plan and execute. We expect 2023 to represent a new baseline for underlying fundamentals," Stichter states.

By Sam Boughedda

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