Brean Capital On Retailers: Downside Risk To April Comps Possible

In a report published Wednesday, Brean Capital analyst Liz Pierce commented on the retailing space, noting that the sector has already priced in a disappointing April but it is "premature to throw in the towel" for the group.

Pierce stated that she had "relatively low expectations" for April comps given a difficult compare due to the Easter shift, it is possible that comps could come in worse than expected given a late arrival of Spring weather and continued West Coast port troubles. The analyst added that based on channel checks in regions not impacted by weather, traffic was "decent" during the bottom half of April but conversion and sales were negatively impacted by merchandise delays.

However, consistent with the past few months, promotional activity (which was up slightly year-over-year) on athleisure and festival looks remained a primary traffic and conversion driver.

Company Specific Outlook:

Pierce offered the following comp expectations for several retailers under her coverage:

• Buckle Inc (NYSE: BKE) is expected to report a comps decline 3 percent to 5 percent, versus +0.8 percent last year.
• L Brands Inc (NYSE: LB) is expected to report a comps in a range of -1 percent to +1 percent, versus a "tough" one-year and two-year stacked compare of +8 percent and +10 percent, respectively.
• Zumiez Inc. (NASDAQ: ZUMZ) is expected to report a comps decline between 2 percent to 4 percent, versus "tough" compares of +8.2 percent and +12.8 percent on a one and two-year stacked basis, respectively.