Despite generalized warnings on a slower third quarter for the majority of fashion retailers, the FashionUnitedTop 100 Index closed up Wednesday, hitting the 1,260.34 thanks to a 7.63 points increase.
Citigroup weighed in on several apparel retailers, cautioning that the "Second quarter was rockier than [...] anticipated and while the retail numbers don't point to an outright recession, inventory levels, input costs and a sluggish sales picture will likely lead to a slower second-half than implied by consensus." With this careful outlook, Citigroup reduced its price target for Abercrombie & Fitch Co. by $14 to $72, while maintaining its "buy" rating.
In addition to that, Jeff Black of Citi Investment Research said in a client note that he was lowering American Eagle Outfitters Inc.'s rating to "Hold" from "Buy." "American Eagle Outfitters change in strategy to fund basics coupled with elevated inventory and higher costs raises the risk profile and we think prospects for an aggressive promotional backdrop could require downward revisions to the full-year earnings per share estimate," he wrote.
But Black added Ann Taylor Stores Corp. to his Top Picks Live list, saying the women's clothing company executed well in the second quarter, with its Loft stores offsetting softness at its Ann Taylor locations. The analyst added that Ann Taylor stores are doing better in the third quarter on fewer promotions and a better product assortment. Finally, Black raised Ann Taylor's price target to $30 from $28.
Looking to the second half of the year, Black anticipates Abercrombie & Fitch Co., Ann Taylor and Chico's FAS Inc. having the strongest earnings growth, while Urban Outfitters Inc., Gap Inc., American Eagle and Aeropostale Inc. are likely to report declines in earnings per share.
Black increased Chico's price target to $16 from $15 and lowered Urban Outfitters to $29 from $31. The analyst also cut Abercrombie & Fitch's price target to $72 from $86, reduced DSW Inc. to $54 from $56 and trimmed rue21 Inc. to $26 from $28.
In the same vein, equities research analysts at Wedbush lowered their price target on shares of Guess Inc from $50.00 to $37.00 in a research note to investors on past Thursday. The analysts currently have a "neutral" rating on the stock. Meanwhile, their peer analysts at Brean Murray cut their price target on shares of Guess Inc from $60.00 to $44.00 in a research note to investors on Thursday. They now have a "buy" rating on the stock. Also, analysts at Jefferies raised their price target on shares of Guess Inc to $62.00 in a research note to investors on Tuesday, July 12nd. On Wednesday, Guess shares closed
Nevertheless, the FU Top 100 Index was dominated by European companies, since the winers chapter was purely composed of companies made in Europe, Ted Baker and Puma AG registered the largest increases, whereas Fossil headed the losers team, falling over 1pc.