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USA:Apparel Retailers back to profit ways |
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2004-9-13
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Retail sales slumped before and during the hurricane, while back-to-school sales were reported sluggish.
August sales showed a decline, while leading several retailers to quarterly numbers that leave much to be desired.
With hurricanes Charley, Frances, and now Ivan, matters got further complicated. Even then, the textiles and apparel industry has a Zacks Industry Rank of 3.0, which places it 92nd out of more than 200 industries. Pretty good a position, considering all the nervousness surrounding retail and the larger implications on consumer confidence.
The bottom line is that strong opportunities still exist, but you may need a little help from the analysts to bring them into the light.
Early data suggests that discount retailers and wholesale club operators bore a good deal of the burden during August. However, those companies with a compelling product have fared better. One of the more recent examples has been Coach.
Earlier this month, as explained below, the accessories stalwart raised its fiscal first quarter guidance thanks to results tracking ahead of plan. A Thomas Weisel Partners analyst stated: "Coach continues to benefit from absence of strong competition, growing the overall market, continued increases in the average ticket due to strong response to higher price point items and solid overall execution. Consumer reaction to the Fall product has continued to be strong."
Other apparel manufacturers that design and market a more specialized product have also been bucking the larger trend. Companies such as Nike, which sells athletic footwear; Timberland, which sells outdoor-inspired footwear; Columbia Sportswear, and Quiksilver, which encompasses a board-riding heritage; have all put together strong numbers of late. Meanwhile, Wal-Mart, the world’s largest retailer, announced earlier this month that its third quarter earnings would only reach the low end of its expected range.
Investors must be cautious at this time. According to the International Council of Shopping Centers, same-store sales in August rose by an anemic +1.2%. That’s below what many were expecting. Consumers are keeping a tight strap on their pocketbooks due to factors such as high gas prices. |
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