Nomura Sees Rough Q4 For L Brands, Michael Kors And More Specialty Retailers
Specialty retailers dependent on shopping malls could be facing a fourth-quarter watershed of bad news, an analyst said Monday.
A myriad of reports suggest the segment had a weak October "and we haven't even gotten to the holidays yet,' Nomura's Simeon A. Siegel said in a note. "There's no question mall challenges persist."
Cutting his earnings estimates on more than a half-dozen players, Siegel said the current period is "likely becoming a headache quarter for years to come."
Siegel sees some holiday hope for Signet Jewelers Ltd. (NYSE: SIG) and L Brands Inc (NYSE: LB) based on an "ability to drive their own traffic."
Underlying demand could benefit Michael Kors Holdings Ltd (NYSE: KORS) and Kate Spade & Co, (NYSE: KATE) while Abercrombie & Fitch Co. (NYSE: ANF) might succeed in pleasing investors by jiggering its spending structure and thus boosting its profit margin.
For those "adventurous enough," Chico's FAS, Inc. (NYSE: CHS) might squeeze some gains with "strict inventory discipline," Siegel said.
Still, Siegel lopped about 5 percent from his 2014 earnings estimate for Abercrombie & Fitch and about 1 percent from his L Brands estimate 2014 estimate and from his 2015 estimate on Chico's.
Siegel didn't immediately offer estimates on Kors or Kate Spade, but made cuts of a similar magnitude on earnings estimates for a half-dozen other specialty retailers. Those included American Eagle Outfitters, Aeropostale, Ann, Francesca's Holdings, The Gap and Urban Outfitters.
Latest Ratings for SIG
Oct 2014 | Barclays | Initiates Coverage on | Overweight | |
Sep 2014 | Bank of America | Reiterates | Buy | |
Sep 2014 | Bank of America | Maintains | Buy |
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