On PreMarket Prep Plus “Wednesday’s With Wedbush,” Senior Equity Research Analyst Tom Nikic covering the footwear and apparel sectors joined the show.
Overview: Nikic was asked to provide a macro look at the retail sector coming off a strong earnings season for many companies coupled with the recent threat of the omicron variant.
Nikic says a few stocks in his coverage area “have gotten ahead” and companies such as under protection (NYSE:UAA) had a “slam dunk” report. As a result, the bar has been set very high for other companies. He added that “supply chain uncertainty” makes it a “game of expectations” moving forward.
Foot locker: In the opinion of Nikic, Foot locker (NYSE:FL) has two fundamental concerns. The first is supply chain issues, which the company’s largest supplier Nike Inc. (NYSE: NKE) has been transparent about this. He predicts that there could be production issues that will affect supply in early 2022.
The other concern is that the company has been a “big beneficiary” of the stimulus package that many of its customers may have taken part in. pocket” can be in their stores.
Due to the aforementioned factors, as well as tough quarterly comparisons ahead, it has a neutral rating on the matter.
No more room upside down: When asked what issue in its coverage area did not meet all expectations, but can still go higher, is Ralph Lauren (NYSE:RL). He cited the full reopening of the economy as a potential positive catalyst for the retailer.
As consumers stop “wearing sweatpants” at home and go back to the office, they may want new clothes. In this sense, with the return to normal, “going out” and doing more things create more desire for new sons.
Finally, the next “round of inventory replenishment in the wholesale channel should be important to them” when it comes to fruition.
The full chat from Wednesday’s show with Tom Nicii can be found here:
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