For Immediate Release
Chicago, IL – June 11, 2010 – Today, Zacks Equity Research discusses the Retail Industry, including Gap, Inc. (GPS), Limited Brands, Inc. (LTD), American Eagle Outfitters, Inc. (AEO) and The Home Depot, Inc. (HD).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/35438/Retail+Industry+Review+and+Outlook+-+June+2010.
Many of the apparel retail chains have benefited even in the tough macro-economic environment. In this group, we prefer the following companies:
Gap, Inc. (GPS), the largest U.S. clothing chain, delivered solid top-line and earnings results for first-quarter 2010. The company is expected to continue to deliver strong sales as comps comparisons remain easy throughout the year. GPS’ size and buying power as compared with other retailers help it to tackle higher costs. Also, the turnaround story in the U.S. has helped the company to build a strong position in order to expand overseas and online.
Limited Brands, Inc. (LTD), a specialty retailer of women’s intimate and other apparel, beauty and personal care products, represents a story with positive comps, margin recovery and strong international growth opportunities. The company’s international twist includes an expansion plan in Canada. The company has been able to showcase the potential of its brand internationally through various initiatives.
Some of the companies, however, have been more than hit by the lackluster macro environment. In this group, we discuss American Eagle Outfitters and Home Depot.
American Eagle Outfitters, Inc. (AEO) reported earnings drop of 55.0% in the first quarter of fiscal 2010. Inventory levels remain high and the pricing environment remains competitive. High inventory levels as compared with peers are an obstacle to out-performance. However, the company’s plan to further expand internationally will help to bolster its growth.
The Home Depot, Inc. (HD), one of the world’s largest home improvement retailers, reported better-than-expected, first-quarter results. However, the company faces fierce competition from various global and regional competitors. Also, exposure to adverse foreign currency translations also puts a question on the future prospects of the company.
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