Consumer Discretionary
4Q EPS guidance came in well below consensus, reflecting a $0.09 FX headwind and -150bp to -200bp Y/Y gross margin deterioration tied primarily to a heated up promotional environment in the US. Janet Kloppenburg views this outlook as a red flag that brand performance maybe deteriorating since she has not witnessed ramping promotions across the DTC or wholesale channels in 4QTD. Thus, while North American wholesale revenue improved to +LSD in 3Q, she worries that margin trends in the quarter maybe under pressure, particularly in the CK brand. For FY25, she was surprised by management’s outlook for 50bp of gross margin pressure as 20% of the GIII business is brought in house. As a result, Janet has cut her EPS forecast for next year as well.
Edition: 201
- 13 December, 2024
Consumer Discretionary
Much stronger merchandising execution - CK’s assortments continue to evolve across hero products as well as the development of more compelling wear to work, non-denim bottoms and activewear assortments. JJK sees this as returning to the brand’s minimalist roots, which is better differentiating CK’s positioning with Gen Z and millennial target markets. In addition, TH’s classic positioning has been elevated across the brand’s polo shirt collection, wear to work and now relevant casual / activewear assortments. JJK models +4.5% FY23 revenue and EPS >$10.75 (vs. $10.35 guidance). Looking into FY24 they expect +MSD top line gains and EPS of $12.20 as EBIT margin improves to 10.7%.
Edition: 169
- 15 September, 2023
Consumer: The recovery engine is reigniting as Covid threats once again wane
Consumer Discretionary
JJK looks for the consumer’s appetite to renew normal living to support upside across PVH, Victoria's Secret, TJX and Ulta Beauty. Demand driven by a return to work, social activities and travel should fuel continued demand strength for apparel, accessories and beauty. With strong evidence from the luxury players including LVMH and Capri Holdings, JJK expects the consumer’s strong demand for these categories to be sustained, with little resistance to elevated pricing.
Edition: 128
- 04 February, 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