Sector Snap: women's specialty retailers

Goldman analyst starts coverage of Express with 'Buy' rating, gives Ann a 'Sell' rating

Associated Press

NEW YORK (AP) -- Goldman Sachs initiated coverage of several women's specialty retailers Monday, seeing the niche as a bellwether for broader women's clothing trends.

Analyst Tiffany Hagge gave Express Inc. a "Buy" rating, seeing a company positioned for earnings growth as its merchandise margin recovers from disappointing sales a year ago. New flagship stores in San Francisco and New York set to open in the fourth quarter and 2014's first quarter respectively are also likely to generate incremental revenue, she added.

Hagge set a $28 price target.

Shares of Express climbed 30 cents to $23.85 in afternoon trading on Monday.

The analyst started Ann Inc. with a "Sell" rating and $29 price target. Hagge believes that Ann, which runs Ann Taylor and Loft stores, has too much inventory on hand and is increasing its promotional activity to move product since demand appears to be slowing. The analyst said that she will be keeping an eye on Ann's promotions and pricing to get a sense of how well it is managing its inventory.

Ann's stock added 3 cents to $35.51.

Hagge is "Neutral" on Chico's FAS Inc. and established a $17 price target. While the first half of 2013 was tough, the analyst doesn't see the second half of the year getting better for the retailer. She said comparisons get tougher for Chico's/Soma and White House Black Market in the third quarter from the second quarter and that the company has been more promotional in the third quarter than in the prior-year period.

Chico's stock gained 28 cents to $17.79.

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