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Europe may actually be strong for retailers

Source: Flickr

While American consumers are cutting back on apparel purchases, Europeans are eager to shop.

PVH (PVH)—the owner of brands including Calvin Klein and Tommy Hilfiger along with smaller ones like Van Heusen and IZOD—highlighted strength of shopping in Europe.

Chairman and CEO Manny Chirico pointed to consumers shopping at home.

“I think it's some of the strength that we're seeing both in our European business and in our Asia business as well, with tourists staying home in market,” he said, “meaning Europeans staying within Europe, the Asian consumer traveling either to Europe or into the Asia market as well.”

Europe was also a positive call-out at Nike, where future orders (NKE) rose 23%.

At VF Corp (VFC), known for brands including Timberland, North Face and Vans, saw European sales rise 2% compared with a decline in the US. “Overall, globally, we are pleased with our start to the year, especially in Europe,” said VP of international Karl Heinz Salzburger.

Meanwhile, Guess (GES) also pointed to improved revenue in Europe.

“In Europe, our retail business performed extremely well and delivered positive comp store sales in the mid-teens, a trend of strong comps that started in the second half of last year,” Guess CEO Victor Herrero said in the company’s press release.

Uggs parent Deckers (DECK) and Ralph Lauren (RL) also pointed to stabilization in Europe.

European excuses

Other retailers weren’t as high on Europe, blaming lower sales economic problems.

At Abercrombie & Fitch (ANF), Executive Chairman Arthur Martinez pointed to international weakness, where comparable store sales declined 7%. CFO Joanne Crevoiserat added that the causes were very broad-based.

“The environment in Europe is very unsettled, likely caused by both currency, lower tourism, the Brexit is causing some uncertainty in those markets as well,” Crevoiserat said.

Tiffany’s (TIF) too said disappointing results were pressured by international cadence.

“Tiffany’s business in Europe remained under pressure in the first quarter, particularly on the Continent, which continued the trend we experienced late last year following the tragedy in Paris and also affected by the more recent tragedy in Brussels,” said investor relations vice president Mark Aron.“

The bottom line: Despite the cries to the contrary from Tiffany’s and Abercrombie, European business in retail is very strong, as evidenced by stabilization in trends and positive commentary from management teams across core retail names.

 

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