Discount Retailers: Deja Vu or Disaster Waiting to Happen?
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Up: 17 | Down: 23 | New: 12
Rating Summary:
44 Buy, 14 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 17 | Down: 23 | New: 12
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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...
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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