巴克莱-美股-零售业-美国软装零售业：品牌立足之地——2018年Q4日程预览-2019.1.25-27页.pdf

Equity Research 25 January 2019 CORE Barclays Capital Inc.and/or one of its affiliates does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.PLEASE SEE ANALYST CERTIFICATION(S)AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 22.U.S.Retail Softlines Brands to Make a Stand-Calendar 4Q18 Preview Recent group-wide weakness places a premium on earnings visibility.Valuations across the group have contracted significantly and Softlines trade at a similar discount to the S&P as during the last recession(Figure 1).CY19 sell-side EPS estimates have moderated only slightly(Figure 2),so this suggests likely concerns about earnings risk relative to Consensus models.We see this set-up as most constructive for multi-national brands and off-price and are more cautious on domestic retailers.Despite investor concerns,there are signs internationally exposed names could perform better than feared.FX pressures are moderating(Figure 3),key international markets continue to grow retail sales and GDP(Figure 4,Figure 5),and recent earnings updates(PVH,VFC)have demonstrated resilience to macro pressures.Given the underperformance of many multi-national brands(Figure 6,Figure 7),we view them as attractive vs.domestic retailers(01/11/19:Amidst Volatility:Rotate into Quality).Domestic trends remain solid,but we see more risk to these names.The strong U.S.macro backdrop is already well-understood,inflationary pressures appear likely persist in CY19 and impact initial company guidance,and the lingering government shutdown impact(Figure 8)could affect near-term domestic consumption particularly with January representing the last month of the retail calendar year.As a result,we are generally more cautious on quarterly results and outlooks for domestic retailers.Earnings results could help rebuild sentiment for TPR,RL,and PVH.We expect TPRs core fundamentals to remain intact and believe solid international trends in F2Q19 could drive a clearing event for shares.RL should benefit from its ongoing top-line turnaround and conservative F2H19 margin guidance,so the F3Q19 set-up also appears constructive.Finally,PVHs recent F4Q18 guidance raise helps to de-risk the quarter and suggests that its initial FY19 EPS outlook could exceed Consensus forecasts,which along with CK progress could help to further rebuild PVHs multiple.On the other hand,we are cautious on GPS and LB in the near term.GPS laps difficult compares in F4Q18 and may not be immune from the mid-December demand lull discussed by other retailers,while we expect building cost pressures to impact the margin and EPS outlook in FY19.Similarly,while LB is set to benefit in FY19 from discrete tailwinds relating to strategic portfolio changes,VS profitability remains under pressure and industry inflation is likely to persist,which could leave less upside vs.FY19 Consensus than some investors expect.Although largely domestic,off-price names appear de-risked into C4Q earnings.BURL,ROST,and TJX enjoy comparable sales momentum that likely continued into C4Q,have limited guidance risk given CY19 EPS estimates have moderated post-C3Q,and maintain structural advantages that should continue to support sentiment.INDUSTRY UPDATE U.S.Retail Softlines NEUTRAL Unchanged U.S.Retail Softlines Chethan Mallela+1 212 526 1191 BCI,US Samira Somany+1 212 526 4602 Samira.S BCI,US Barclays|U.S.Retail Softlines 25 January 2019 2 CONTENTS QUARTERLY CHARTS.3 CALENDAR 4Q18 EARNINGS CHEAT SHEET.7 DETAILED COMPANY COMMENTARY.8 Burlington Stores Inc.(Overweight).8 G-III Apparel Group(Equal Weight).9 Gap Inc.(Underweight).10 HanesBrands Inc.(Equal Weight).11 L Brands(Equal Weight).12 PVH Corp.(Overweight).13 Ralph Lauren Corp.(Equal Weight).14 Ross Stores Inc.(Equal Weight).15 The TJX Companies Inc.(Equal Weight).16 Tapestry,Inc(Overweight).17 Barclays|U.S.Retail Softlines 25 January 2019 3 QUARTERLY CHARTS FIGURE 1 The recent pull-back in Softlines stocks means that the groups relative valuations vs.the S&P 500 is near 2008 recession levels FIGURE 2 Consensus CY19 EPS estimates have only moderated slightly in recent months and we believe the groups recent multiple compression is reflects perceived additional EPS risk Source:Refinitiv,Barclays Research;reflects median NTM P/E based on Consensus forecasts;median includes AEO,BURL,CPRI,CRI,COLM,GIII,GPS,HBI,JWN,KSS,LB,M,PLCE,PVH,RL,ROST,SIG,TIF,TJX,TPR,URBN,VFC Source:Refinitiv,Barclays Research;reflects average Consensus EPS forecasts;Consensus includes AEO,BURL,CPRI,CRI,COLM,GIII,GPS,HBI,JWN,KSS,LB,M,PLCE,PVH,RL,ROST,SIG,TIF,TJX,TPR,URBN,VFC FIGURE 3 Based on current spot rates,we calculate an average-80 bps YOY revenue headwind from FX in CY19(a+20 bps moderation since mid-November)Source:Company reports,Refinitiv,Barclays Research estimates&analysis;based on 1/24/19 spot rates;BURL and ROST excluded as 100%of sales are domestic (70)%(60)%(50)%(40)%(30)%(20)%(10)%0%10%20%30%$4.00$4.10$4.20$4.30$4.40$4.50$4.60$4.70CY2018CY20199/30/20181/24/2019+0.1%(2.9%)(2.5%)(2.0%)(1.5%)(1.0%)(0.5%)0.0%GIIIGPSHBILBPVHRLTJXTPRAverage11/15/20181/21/2019Barclays|U.S.Retail Softlines 25 January 2019 4 FIGURE 4 China retail sales growth is near the top of the pack on an absolute basis and,though near the bottom,the Eurozone continues to grow FIGURE 5 However the delta between the current growth rate and the 2018 peak is not as significant for both China&the Eurozone vs.other markets Source:Haver,Barclays Research Source:Haver,Barclays Research FIGURE 6 Since the start of C4Q18 domestic retailers have seen a median stock decline of-18%FIGURE 7 which has outperformed the multinationals brands,which performed at-24%at the median Source:Refinitiv,Barclays Research;priced as of 1/24/19 close Source:Refinitiv,Barclays Research;priced as of 1/24/19 close (6)%(4)%(2)%0%2%4%6%8%10%ChinaRussiaBrazilU.S.PolandNew ZealandU.K.AustraliaSouth KoreaMexicoTaiwanJapanHong KongEurozoneCanadaSwitzerlandSingaporeMost Recent Retail Sales(%chng YOY)(1.6)%(1.4)%(1.2)%(1.0)%(0.8)%(0.6)%(0.4)%(0.2)%0.0%U.K.PolandSouth KoreaBrazilMexicoCanadaChinaRussiaAustraliaNew ZealandEurozoneU.S.SwitzerlandTaiwanIndiaJapanCurrent GDP Growth vs.2018 Max(70.0)%(60.0)%(50.0)%(40.0)%(30.0)%(20.0)%(10.0)%0.0%10.0%(45.0)%(40.0)%(35.0)%(30.0)%(25.0)%(20.0)%(15.0)%(10.0)%(5.0)%0.0%Barclays|U.S.Retail Softlines 25 January 2019 5 FIGURE 8 The government shutdowns in late 2013(16 days)and early 2018(3 days)appeared to impact U.S.retail sales growth,so we believe the present shutdown(34 days and counting)could similarly have a short-term impact Source:Haver,Barclays Research FIGURE 9 Although y/y trucking spot rate pressure has begun to moderate,overall costs remain elevated vs.recent years,which could signal continued pressure for the group in CY19(due to contracts)FIGURE 10 Similarly,despite the recent moderation,cotton prices were inflationary for the majority of CY18,which we see as relevant for some companies CY19 costs(given hedging)Source:DAT Solutions,Barclays Research Source:Barclays Research,Bloomberg (4.0)%(2.0)%0.0%2.0%4.0%6.0%8.0%10.0%Jul-12Nov-12Mar-13Jul-13Nov-13Mar-14Jul-14Nov-14Mar-15Jul-15Nov-15Mar-16Jul-16Nov-16Mar-17Jul-17Nov-17Mar-18Jul-18Nov-18(20)%(10)%0%10%20%30%40%$1.40$1.60$1.80$2.00$2.20$2.40$2.601/18/20164/18/20167/18/201610/18/20161/18/20174/18/20177/18/201710/18/20171/18/20184/18/20187/18/201810/18/20181/18/2019DAT Spot Prices(LHS)YOY%change(RHS)65707580859095(40)%(30)%(20)%(10)%0%10%20%30%40%50%YOY%chng(LHS)CT1 Price(RHS)Barclays|U.S.Retail Softlines 25 January 2019 6 FIGURE 11 In CY18,21 states(incl.DC)increased minimum wages at an average of+6.0%YOY,which along with competitive increases contributed to inflationary pressure for the group FIGURE 12 We expect continued wage pressure in CY19,as 22 states(incl.DC)have minimum wage increases that average+5.1%YOY,while competitive pressures also seem unlikely to subside Source:DOL,Barclays Research Source:DOL,Barclays Research 0%2%4%6%8%10%12%14%16%MDDCMEORCACOHINYRIAZVTWAMISDMONJFLMTOHMNAK0%2%4%6%8%10%12%14%16%MEMOCAMACOARNYDEDCAZORWARIOHNJSDVTFLMTMNMIAKBarclays|U.S.Retail Softlines 25 January 2019 7 CALENDAR 4Q18 EARNINGS CHEAT SHEET Source:Refinitiv,Barclays ResearchCompanyCurrent Fisc.QRelease DateBarclays EPS C4Q18Cons.EPS C4Q18What we care about this QBarclays viewBURL4Q18Week of 3/4(est.)$2.75$2.77(1)%-Updated FY19 guidance-Comparable sales growth vs.peers-F4Q margin progress&updated FY19 driversWe expect continued top-line momentum in F4Q18 despite tougher compares and FY19 estimates already appear de-risked based on initial guidance,so we see a positive quarterly setup.CPRI3Q192/6RS$1.58 n/aGIII4Q19Late March(est.)$0.43$0.42 2%-Initial FY20 guidance-Outlook for retail profitability&top-line-Commentary on wholesale trendsWe see signs that some of the recent concerns around GIII may be overdone,but believe improved DKNY and retail visibility is still needed.GPS4Q182/28$0.69$0.69(0)%-Initial FY19 guidance-Inflation outlook&updated cost savings plan-Comparable sales across bannersGPS laps difficult comp sales and GM compares and we believe it is likely to face rising cost pressures in FY19,which keeps us cautious into results.HBI4Q18Week of 2/4(est.)$0.48$0.46 3%-F4Q operating cash flow-Innerwear growth in F4Q and FY19 outlook-FY19 guidance and intl macro commentaryHBIs F4Q cash flow and innerwear targets leave little margin for error and FY19 visibility is also be clouded,which is balanced against already negative sentiment.LB4Q182/27$2.10$2.07 1%-VS F4Q margins+promotional intensity-Initial FY19 guidance&HB/La Senza flow-through-BBW comp growth&driversWe view LB as a rare Softlines name for which buy-side FY19 expectations are above Consensus and see initial guidance as key,though VS turnaround visibility is likely needed for a large re-rating.PVH4Q183/27$1.75$1.76(0)%-Initial FY19 guidance-Discussion of Europe and China macro-CK sequential progress and margin visibilityPVHs recent FY18 guidance increase augurs well for quarterly results&initial FY19 guidance,and we think the quarter could represent another step in rebuilding sentiment and valuation.RL3Q192/5$2.17$2.14 1%-Const.FX sales growth-Discussion of Europe and China macro-Margin expansion&inventory growthRLs improving top-line momentum and back-half margin visbility support the F3Q18 set-up,though its multiple has less re-rating potential than some peers.ROST4Q183/5/2019(est.)$1.13$1.13 1%-Initial FY19 guidance&margin commentary-Top-line growth drivers(comp vs.non-comp)-Update on inflationary pressuresWe expect F4Q18 to demonstrate continued momentum,while BURL and TJXs recent commentary about CY19 cost pressures has helped to de-risk the forward outlook.TJX4Q192/27$0.66$0.68(3)%-Full&updated FY20 guidance-Marmaxx and Home Goods comps&drivers-Margins by brand&outlook on costsWe anticipate another quarter of strong top-line for TJX in F4Q19 and believe the key question is whether the company will raise its initial FY20 guide,given Consensus is above the range.TPR2Q192/7$1.10$1.11(1)%-Coach brand comp trends-Commentary on intl macro(China&Japan)-Kate Spade performance+SW recoveryWe see TPRs recent underperformance as a function of macro concers that are overdone and see the potential for a solid quarter to represent a clearing event.Barclays|U.S.Retail Softlines 25 January 2019 8 DETAILED COMPANY COMMENTARY Burlington Stores Inc.(Overweight)In the context of muted sentiment on the retail space at large,we believe BURL remains a relative safe haven and expect this to show through with F4Q18 results.In particular,BURL has already provided initial FY19 EPS guidance,which should de-risk estimates heading into F4Q18 results.Furthermore,although BURL laps its most difficult YAG comparison on comps(+5.9%YOY and+10.5%on a two year stack basis),recent momentum and likely growth from holiday gifting categories(beauty,fragrance,toys)give us confidence in BURLs ability to effectively comp the comp.Finally,BURL only imports 5%of its receipts from China,which should insulate the company from any potential tariff risk,while off-price also offers key defensive properties(09/28/2018:Off-Price:Recession Lessons).As a result of these factors,as well as its significant margin gap vs.peers,we continue to view BURL as attractive at current levels even in the context of recent share price performance(+4%since 09/30/18 vs.-7%for ROST and-13%for TJX).FIGURE 13 Barclays vs.Consensus Estimates for BURL Source:Company data,Barclays Research estimates,Refinitiv;updated as of 1/24/19 Earnings Date Release:Week of March 4,2019(est.)Conference Call:Week of March 4,2019(est.)BURLBarclaysConsensusVarianceBarclaysConsensusVarianceBarclaysConsensusVarianceSales$2,040.6$2,037.3 0.2%$6,711.0$6,692.8 0.3%$7,202.5$7,263.3(0.8%)%chng5.0%41.0%9.8%9.5%7.3%8.5%Gross margin42.7%42.4%34 bps42.2%42.0%19 bps42.6%42.2%42 bpsbps chng45 bps11 bps41 bps22 bps45 bps22 bpsEBIT$264.2$262.9 0.5%$603.3$595.4 1.3%$674.8$666.6 1.2%chng5.7%5.1%16.4%14.9%11.9%12.0%EBIT margin12.9%12.9%5 bps9.0%8.9%9 bps9.4%9.2%19 bpsbps chng9 bps4 bps51 bps41 bps38 bps19 bpsEPS$2.75$2.77($0.02)$6.37$6.38($0.02)$7.05$7.05$0.00%chng24.4%25.2%44.4%44.8%10.8%10.5%EBITDA$318.2$317.6 0.2%$798.3$796.4 0.2%$890.4$888.4 0.2%chng6.8%6.6%14.7%14.4%11.5%11.6%F4Q18EFY18EFY19EBarclays|U.S.Retail Softlines 25 January 2019 9 G-III Apparel Group(Equal Weight)Sentiment on GIII has been negatively impacted by tariff concerns,ongoing challenges in its retail business,and questions about the altered distribution strategy for DKNY.In addition,we believe recent department store sales results particularly for Macys may have prompted some near-term concern on the state of GIIIs wholesale business.Importantly,there are signs that some of these concerns may be overdone.Recent media results suggest trade tensions may be starting to thaw(01/17/19:WSJ),department store results may not be a significant negative read-through for the company(01/15/2019:GIII-ICR 2019 Feedback),and new retail leadership is likely to result in a re-evaluation of the strategy for the business.Furthermore,management has remained consistent in its view that expanding the distribution of DKNY will be a positive for brand fundamentals and is not expected to hurt its legacy Macys business.However,despite more constructive recent commentary,the likely earnings contribution from the Retail segment and DKNY next year remains a key question for us which clouds visibility to the likely growth rate in FY20.Given the recent recovery in shares(+20%YTD vs.+7%for the XRT),this keeps us on the sidelines for now.FIGURE 14 Barclays vs.Consensus Estimates for GIII Source:Company data,Barclays Research estimates,Refinitiv;updated as of 1/24/19 Earnings Date Release:Late March(est.)Conference Call:Late March(est