What’s trending in Retail
Consumer Discretionary
Each week, The Retail Tracker offers an insightful perspective on retail, fashion and consumer trends and what it means for the stocks. So far this year, Garage is a standout, nailing the “sexy x comfy” aesthetic for teens and taking share from Aerie and Pink. Gap and Old Navy are “crushing it” with consistently strong assortments, offsetting tariff challenges through fewer markdowns. Meanwhile, Urban Outfitters and Nuuly are gaining traction, with Nuuly emerging as a promising rental and tech-driven play. Aritzia is showing good momentum with its best assortment in some time. Department stores may be in free fall, but the best Macy’s stores have never looked better. In contrast, Lululemon is losing its way, expanding beyond its core and diluting its brand identity, while Bath & Body Works' range of new items is exhausting.
Edition: 214
- 27 June, 2025
Consumer Discretionary
Looking out over the NTM, whether trade deals are made or not, Brian McGough thinks LULU's earnings power lands closer to $10 than the Street's $17+ and that the current narrative around high growth in China / RoW offsetting North American weakness dissipates, as a +30% revenue growth number gets more than cut in half and the continued weakness in the core US model rears its ugly head. In that context, a peak margin gets slashed, McDonald gets fired and the company sees a major restructuring / cost cutting programme to prop margins and save face… but, not before the stock is trading at 15x a $10 earnings number. Brian still sees 50% downside from current levels.
Edition: 209
- 18 April, 2025
Consumer Discretionary
After reviewing the Valentine’s Day assortments for VS and Pink, JJK believes management is delivering on its promise to refresh/modernise the brand. They highlight the group’s highly differentiated assortments vs. competitors who have, to date, underplayed the important VD holiday (except for Lululemon where product and colours are very impactful). This should drive ongoing +traffic and +conversion and +AUR, supporting productivity recapture after many years of declines. With the benefit of easing comparisons, JJK expects momentum to build in 1H25. They model FY24 and FY25 EPS of $2.35 and $2.85, respectively, with EBIT margin increasing from 5.6% in FY24 to 6.1% in FY25.
Edition: 203
- 24 January, 2025
Consumer Discretionary
Janet Kloppenburg has been disappointed with LULU's merchandising execution in recent months. Despite management’s confidence that newness would accelerate in Q2 and into 2H24, Janet has not observed any significant new introductions beyond the troubled Breezethrough collection, resulting in bland / basic assortments. She is concerned that the brand may have fallen behind and is chasing the trends, rather than leading as has been the case historically. This lost opportunity may constrain LULU’s North American turnaround, which guidance assumes will emerge in the second half of this year.
Edition: 192
- 09 August, 2024
There are two lanes in retail winning right now - momentum and improvement
Consumer Discretionary
Brands with good momentum include Lululemon, Abercrombie, Chico’s, Steve Madden, LVMH, Prada, Ralph Lauren and Macy’s. According to The Retail Tracker, these retailers are entering the back half of the year with the consumer on their side and good assortments. In the improvement lane, they highlight Gap, Target, American Eagle, Bath & Body Works and Nike. They also like the risk:reward in two currently out of favour names - Williams-Sonoma (a high-quality company, with exceptional brands / leadership) and Victoria's Secret (left for dead / trades at a steep discount).
Edition: 166
- 04 August, 2023
Consumer Discretionary
LULU ex-NA revenue growing ahead of consensus and continues to outperform in China sportswear sector. The company's online sales normalised in F1Q23 QTD, though still outperformed peers by a large extent, thanks to the continuous popularity of its functional sportswear. LULU China offline sales surged in F1Q23 QTD, thanks to 1) successful Women’s Day promotion, 2) boost by tourist spending in Hong Kong, 3) new product launches, 4) continued store opening, 5) strong branding, and 6) easy comps in Mar which is to continue in Apr / May.
Edition: 160
- 12 May, 2023
Consumer Discretionary
Stock soars on revenue, earnings beat - after two years of the share price moving sideways despite consistent upward revisions to earnings, John Zolidis thinks these results could be the event that sets off a round of valuation expansion and vaults the name firmly back into the momentum camp. His model is generating both EPS and FCF per share above $20 by FY26 (vs. FY23 ~$12 for EPS and $10 for FCF). A P/E of 30x (justified by ~29% EBITDA margins and vs. a ten-year average P/E of >33x) suggests a $600 per share value by early 2025. John remains bullish the stock and would look to add on any market weakness.
Edition: 157
- 31 March, 2023
Consumer Discretionary
Innovation levels within the early spring performance apparel assortments looks very strong according to Janet Kloppenburg. She is also impressed with the increased newness in the On the Move assortment and thinks the recent hiring of Elizabeth Binder as chief merchandising officer will support ongoing gains. Janet continues to believe 4Q22 revenue will come in ahead of expectations, leading to an EPS beat ($4.33/$10 for 4Q/F22). Looking into 1H23, she expects top line gains to exceed consensus forecasts (+HTeens), however, 1H23 EPS may track below current buy-side estimates. For FY23, Janet models +17% y/y revenue and $11.80 EPS (vs. $11.40 consensus).
Edition: 152
- 20 January, 2023
Consumer Discretionary
IPO'd last year, this Swiss shoe company is on a winning path as it enters the US market - boasting a beautiful design and appealing logo, ON is targeting the fashion x function customer which has proved so successful for the likes of Nike, Lululemon and Moncler. This approach allows for a range of distribution points helping to broaden brand awareness. Retailers like Bandier and Dover Street Market will also help to bring the brand to the younger fashion crowd. This is important, while this shopper can be fickle, this space, unlike denim or beauty, is not seeing new brand launches every year.
Edition: 126
- 07 January, 2022
These retailers are primed for growth in 2022
Consumer Discretionary
Consumer stocks are climbing the wall of worry reflecting supply chain challenges, higher distribution expense, rising prices and tough comps. Hence, there is limited visibility on the consumer sector delivering yoy F22 earnings gains. JJK highlight a select few who are well positioned for growth, including the value focused off-price retailers (TJX, Burlington, Ross) and beauty leaders (Bath & Body Works, Estee Lauder, Ulta). Upgraded growth strategies and Europe’s emerging rebound should also drive strong upside at A&F, Capri Holdings, Lululemon, PVH, Ralph Lauren and Victoria’s Secret.
Edition: 120
- 01 October, 2021
Lululemon Athletica (LULU)
Consumer Discretionary
Following a stellar spring quarter, LULU has eased ever-so-slightly 2QTD and needs to hit the accelerator again. The company faces growing competition from Athleta and Sweaty Betty, performancewear king Nike and an on-fire Target whose new value-priced All-in Motion brand is capturing share of wallet almost across the board. Craig Johnson also flags LULU’s relative soft spot in bringing more men to the party and how pricing is a problem that needs to be addressed.
Edition: 113
- 25 June, 2021