Morgan Stanley Downgrades Luxury Retailers for This Reason

Luxury goods retailers (NYSE:XRT) have been doing better than mainstream retailers who have to rely heavily on promotions and discounts to get people to shop. Whereas the normal shopper is cautious, the rich are not hesitating to open their purses. “We’ve been seeing in these more challenging times that the high-end retailers have been doing very well because those who can afford it are opening their purses,” said Steve Riordan, global managing director for PRGX Global Inc., last month.

Though September retail sales were better than what analysts expected, conditions going forward are not getting better as unemployment remains high and wage growth is stagnating. The National Retail Federation expects sales growth for the two months ending Dec. 31 to rise just 2.8% from a year ago, versus a 5.2% gain in the year-ago period. After adjusting for inflation, sales are actually set to decline about 1%, according to the Consumer Price Index calculator on the U.S. Bureau of Labor Statistics web site.

It comes as no surprise, therefore, that Morgan Stanley (NYSE:MS) has downgraded luxury retailers such as Coach (NYSE:COH), Nordstorm (NYSE:JWN), and Tiffany (NYSE:TIF) from Overweight to Equal Weight.

Here’s how luxury retailers closed the week:

  • Coach Inc. (NYSE:COH): The shares recently traded at $64.94, down $0.7, or 1.07%. Its market capitalization is $18.82 billion. They have traded in a 52-week range of $45.70 to $69.20. Volume today was 2,727,663 shares versus a 3-month average volume of 4,471,280 shares. The company’s trailing P/E is 21.50, while trailing earnings are $3.02 per share. The company pays a dividend of $0.90 per share for a dividend yield of 1.40%. About the company: Coach, Inc. designs, produces, and markets primarily leather goods. The Company’s products include handbags, business cases, men’s and women’s accessories, luggage and travel accessories, leather outerwear, and gloves. Coach, together with a licensing partner, offers watches, footwear, furniture, and eyewear. Get the most recent company news and stock data here >>
  • Nordstrom Inc. (NYSE:JWN): The shares recently traded at $50.28, down $0.79, or 1.55%. Its market capitalization is $10.69 billion. They have traded in a 52-week range of $37.28 to $53.35. Volume today was 1,959,881 shares versus a 3-month average volume of 3,766,150 shares. The company’s trailing P/E is 16.70, while trailing earnings are $3.01 per share. The company pays a dividend of $0.92 per share for a dividend yield of 1.80%. About the company: Nordstrom, Inc. is a fashion retailer of apparel, shoes, and accessories for men, women, and children. The Company operates through multiple retail channels, discount stores, boutiques, catalogs, and on the Internet. Nordstrom, Inc. also offers, through a subsidiary, private label card credit and debit cards. Get the most recent company news and stock data here >>
  • Tiffany & Co. (NYSE:TIF): The shares recently traded at $77.65, down $0.89, or 1.13%. Its market capitalization is $9.88 billion. They have traded in a 52-week range of $54.20 to $84.49. Volume today was 2,020,010 shares versus a 3-month average volume of 2,940,190 shares. The company’s trailing P/E is 24.59, while trailing earnings are $3.16 per share. The company pays a dividend of $1.16 per share for a dividend yield of 1.50%. About the company: Tiffany & Co. operates jewelry and specialty retail stores and designs and manufactures its products through subsidiary companies. The Company retails its products through stores and boutiques in the United States, Mexico, Canada, and Brazil, and wholesales outside the United States. Tiffany also markets through the Internet and catalogs. Get the most recent company news and stock data here >>
  • Saks Incorporated (NYSE:SKS): The shares recently traded at $10.65, down $0.18, or 1.66%. Its market capitalization is $1.67 billion. They have traded in a 52-week range of $7.67 to $12.97. Volume today was 1,954,372 shares versus a 3-month average volume of 3,898,540 shares. The company’s trailing P/E is 21.26, while trailing earnings are $0.50 per share. About the company: Saks, Inc. operates department stores in the United States. The stores offer a wide variety of branded and private label merchandise including luxury apparel, shoes, accessories, cosmetics, and decorative home furnishings. Get the most recent company news and stock data here >>

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