COREBarclaysCapitalInc.and/oroneofitsaffiliatesdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.PLEASESEEANALYSTCERTIFICATION(S)ANDIMPORTANTDISCLOSURESBEGINNINGONPAGE411.EquityResearch12November2019Restricted-InternalU.S.SpecialtyRetail,Apparel&E-CommerceInitiatingCoverage:IntroducingPRISM360°,aHolisticApproachtoRetailInitiatingonU.S.SpecialtyRetail,Apparel&E-CommerceatNeutral.OurNeutralratingisbasedonanimprovingtariffbackdrop,offsetbysector-wideinventorybuild,negativemalltraffic,andgeneraloversupply.Withinthebroadercoverageuniverse,ourviewsonoursubgroupsarebifurcated.WehaveapositiveviewofOff-Priceretailandwholesalebrandswithpricingpowerthataremovingtodirect-to-consumer.Wehaveanegativeviewofmall-basedretailersthatsellcommoditizedproducts.Weareinitiatingon26names,nineOverweight,threeUnderweight,and14EqualWeight.TheOverweights:NKE(TopPick),VFC,BURL,EYE,RH,RL,TJX,WSM,ROST.NKEandVFChavehighlydesirablebrandsbackedbytechnologicalanddesigninnovation.RLisproactivelyrebuildingitsglobalbrandwithevidenceofearlysuccess.Thesewholesalerscansignificantlygrowtheirmargin-accretivedirect-to-consumerchannels.BURL,ROST,andTJXofferanOff-Pricevalueproposition,withlittletonoe-commercecannibalization.EYEisagrowthstorydominantinthevaluevisioncaresegment,withunit,product,andserviceopportunities.RHhassolvedtheomnichanneldilemma,withinventory-lessGalleriesactingasadvertisingratherthansourcesofmarginrisk.WSMhaspositivecompmomentum,growthopportunitiesinWestElm,andoffersattractiverisk/reward.TheUnderweights:GPS,LB,W.GPSandLB,whilebotharerelatively“cheap”onvaluationembeddingdownsideexpectations,exemplifyourthemeofretaildeleverage.WeseecompandEPSriskinFY20forboth.AlthoughWisthebeneficiaryoftheshiftofhomefurnishingsonline,weexpectthemixofslowingtop-lineonalargerbaseofcompsales,combinedw...
