UBS: Sell Kohl's, Macy's, Buy "Go It Alone" Brands
UBS on Tuesday issued downgrades for retail stocks Macy’s ( M , $6.80) and Kohl’s ( KSS , $22.33), but in so doing also laid out the new operating blueprint for fashion brands. "To deliver steady long-term growth, we believe brands can no longer rely on Malls or Dept. Stores to drive traffic," a UBS analyst team led by Jay Sole writes. "Brands have to generate their own audiences and become destinations." 14 Bankruptcy Filings Chalked Up to COVID-19 "Premium" brands should be able to operate in a virtuous cycle that help them at the top of the retail food chain: A strong value proposition earns high gross margins. High gross margins help a company build a successful direct-to-consumer operation. A strong DTC business lets brands better control inventory and their own brand image. Customer loyalty follows, driving strong returns. The company can then reinvest those returns to keep the cycle moving. UBS pinpoints eight Buy-rated stocks it thinks can pull off what it calls a "Go It Alone" model: Nike ( NKE , $98.36), $127.00 PT Levi's ( LEVI , $12.15), $23.00 PT Skechers ( SKX , $29.60), $32.00 PT American Eagle ( AEO , $10.35), $14.50 PT PVH ( PVH , $49.02), $107.00 PT Capri Holdings ( CPRI , $16.31), $26.00 PT Canada Goose ( GOOS , $22.63), $30.00 PT Deckers Outdoor ( DECK , $201.30), $250.00 PT Indeed, Nike on Wednesday made several changes to its senior leadership team to "support the company's Consumer Direct Acceleration (CDA)" as the athletic apparel company continues its shift to a more direct-sales-focused strategy.
UBS: Sell Kohl's, Macy's, Buy "Go It Alone" Brands
UBS on Tuesday issued downgrades for retail stocks Macy’s ( M , $6.80) and Kohl’s ( KSS , $22.33), but in so doing also laid out the new operating blueprint for fashion brands. "To deliver steady long-term growth, we believe brands can no longer rely on Malls or Dept. Stores to drive traffic," a UBS analyst team led by Jay Sole writes. "Brands have to generate their own audiences and become destinations." 14 Bankruptcy Filings Chalked Up to COVID-19 "Premium" brands should be able to operate in a virtuous cycle that help them at the top of the retail food chain: A strong value proposition earns high gross margins. High gross margins help a company build a successful direct-to-consumer operation. A strong DTC business lets brands better control inventory and their own brand image. Customer loyalty follows, driving strong returns. The company can then reinvest those returns to keep the cycle moving. UBS pinpoints eight Buy-rated stocks it thinks can pull off what it calls a "Go It Alone" model: Nike ( NKE , $98.36), $127.00 PT Levi's ( LEVI , $12.15), $23.00 PT Skechers ( SKX , $29.60), $32.00 PT American Eagle ( AEO , $10.35), $14.50 PT PVH ( PVH , $49.02), $107.00 PT Capri Holdings ( CPRI , $16.31), $26.00 PT Canada Goose ( GOOS , $22.63), $30.00 PT Deckers Outdoor ( DECK , $201.30), $250.00 PT Indeed, Nike on Wednesday made several changes to its senior leadership team to "support the company's Consumer Direct Acceleration (CDA)" as the athletic apparel company continues its shift to a more direct-sales-focused strategy.