A point of differentiation and where in the growth cycle the firm is are two areas of consideration before Howard Tubin makes that critical decision to issue a “buy” recommendation on a company’s stock.
Tubin, director in the equity research department of RBC Capital Markets who covers the softlines sector, told attendees that uniqueness, or a point of differentiation, gets his attention.
What Tubin wants to know is, “Do the product offerings stand out from the crowd?”
It’s the singular most important criterion. To be sure, quality of the management team is a consideration. And so too is the firm’s balance sheet. Also very high on that list, he said, is “where in the growth cycle” does the company under consideration fall? If it’s in that early stage, then you have a growth stock.
Among the names on Tubin’s list of standouts are Lululemon Athletica Inc., Limited Brands Inc., PVH Corp., The TJX Cos. Inc. and Ralph Lauren Corp. That’s because these firms are “meaningful to the crowd.”
Those representing firms whose uniqueness seem to have lost their edge include Gap Inc., The Talbots Inc. and Coldwater Creek Inc.
Tubin also said he doesn’t subscribe to the view that retailers in the lower-tier distribution channel are more risky. He pointed to Dollar General Corp. as an example.
“Dollar General is doing well because of the brands they offer, not the tier [of distribution] they’re in,” Tubin said.
In the question-and-answer session, Tubin noted how some companies are starting to look overseas for expansion, even if, like the Gap, they don’t have stellar performance in the U.S.
He also was lukewarm about J.C. Penney Co. Inc.’s planned every-day low-price strategy. While the move could help drive comparable-store sales, the analyst said it’s a strategy that would be “tough to wean customers off.”
When asked about some of the younger companies that offer a creative spark, Tubin cited Francesca’s Holding Corp., which went public earlier this year. Mentioning its small footprint of only 300 stores, Tubin said Francesca’s is unique and it doesn’t operate “cookie-cutter stores.”
As for last year’s takeover candidates, American Eagle Outfitters Inc. and Aéropostale Inc., teen retailer Aéropostale got the value component of the equation right, but missed on its merchandise mix. American Eagle has done a better job on its merchandise strategy. Both are essentially turnaround stories. Both are also takeover targets from a valuation point of view, but with little or no debt and cash on the balance sheets, Tubin concluded: “I don’t suspect either one would fold.”
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
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Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
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For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)