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July 4th Seen Lacking Retail Impact

Analysts gave mixed opinions on how retail sales will fare this July 4th holiday week and weighed in on other retail news - from an innerwear maker's innovation to lackluster prospects for a golf unit sale.

Analysts gave mixed opinions on how retail sales will fare this July 4th holiday week and weighed in on other retail news — from an innerwear maker’s innovation to lackluster prospects for a golf unit sale.

WR Hambrecht + Co Inc. analyst Melissa Otto expects an uptick in retail sales this week on increased tourist traffic thanks to the weak U.S. dollar. Otto said luxury and mass luxury retailers will see the greatest benefits and expects Saks Inc., Polo Ralph Lauren Corp. and Coach Inc. stores to do particularly well.

Otto warns nice weather could be a double-edged sword, keeping shoppers on their feet in walking cities such as New York and San Francisco, but beaching shoppers elsewhere. Otto expects little retail stock movement as workers turn in vacation days.

Meanwhile, Brean Murray Carret & Co. analyst Eric Beder said July 4th is not a meaningful retail holiday, especially as it falls in the middle of peak clearance season.

“I do not think most people view their patriotic duty to shop in the mall,” said Beder, who said July 4th’s Wednesday calendar appearance further marginalizes shopping prospects as its does not create an extended weekend.

Last week, Beder resumed coverage of Maidenform Brands Inc., shares of which closed Friday up 1.3 percent to $19.86, with a buy rating on the company’s “innovative play in a highly defensive category” and “material potential” for top- and bottom-line growth. Beder issued a price target of $25 and said he sees a long-term earnings per share growth rate of 15 percent.

“Maidenform’s excellent track record as a product innovator continues to be reflected in each new product that the company brings to market,” Beder said in a research note.

On the teen fashion front, Telsey Advisory Group’s Dana Telsey noted upgraded product and affordable prices at Aéropostale Inc.’s back-to-school preview. Telsey said the teen retailer’s assortment looks “encouraging” and better than in recent years, with an emphasis on polos and fleeces for boys and Bermuda shorts and skinny jeans for girls for the b-t-s shopping season, which kicks off in July. Aéropostale closed Friday down 1 percent to $41.68.

Telsey also commented on media reports that Nordstrom Inc. is close to selling its Façonnable label to a private equity firm for $200 million — and noted the speculated price is below the $350 million Nordstrom paid for the brand in 2000.

This story first appeared in the July 2, 2007 issue of WWD.  Subscribe Today.

“A potential sale of Façonnable was announced by Nordstrom in early February this year, so the news would not be a big surprise and rather benign to Nordstrom as [a] whole, as well as the impact on the stock,” Telsey wrote in a report. Nordstrom shares closed Friday up 1.5 percent to $51.12.

Morgan Keegan analyst Brad Stephens called surf and ski shop Quiksilver Inc.’s decision to buy out the remaining 36 percent of its Cleveland Golf division an “incremental positive” — and said he “can’t imagine” the unit being part of Quiksilver this time next year.

“As everyone seems to know that Quiksilver wants to rid itself of the burden, the sale of the business would help to ease investor concerns — no matter the price,” Stephens said. Shares of Quiksilver closed Friday up 3.2% to $14.13.