Which Retailers Will Perform Well in 2012?
Barclays (NYSE:BCS) is a major global services provider engaged in retail and commercial banking, credit cards, corporate and investment banking and wealth management. With the year coming to an end, Barclays turns its focus to 2012.
On Monday, the company released its outlook for retailers. Analyst, Robert S. Drbul, said, “As we look to 2012, we expect less drag from inflation at the consumer level and see a big benefit from lower material input costs at retailers and apparel companies. We expect modest consumption and income growth, but are cognizant of the decline in the personal savings rate.Our expectations for 2012 include continued solid top line momentum.” He goes on to explain that high-end retailers such as Nordstrom (NYSE:JWN), Saks (NYSE:SKS), Tiffany & Co. (NYSE:TIF), Costco (NASDAQ:COST) and Coach (NYSE:COH) should show strength in 2012.
Listed below are Barclays’ top retail picks for 2012:
Nike, Inc. (NYSE:NKE): One of the most popular names in sports. The Company designs, develops, and markets athletic footwear, apparel, equipment, and accessory products for men, women, and children. Barclays explains that in the past five years, Nike has outperformed the S&P (NYSEARCA:SPY) in Summer Olympic years by an average of 24.5%. The bank has a price target of $125 for Nike. Barclays also maintained its overweight position on Wal-Mart (NYSE:WMT).
Tiffany & Co. (NYSE:TIF): The world’s premier jeweler and America’s house of design since 1837. The Company 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. Barclays believes Tiffany offers a compelling valuation at 15.6 times fiscal year 2012 earnings per share, with its strong global brand presence. Barclays maintains an equal weight rating on Liz Claiborne (NYSE:LIZ).
Warnaco Group Inc. (NYSE:WRC): A global apparel leader which designs, sources, markets, licenses and distributes a broad line of intimate apparel, sportswear and swimwear worldwide. The Company’s products are sold under several highly recognized brand names, including, but not limited to, Calvin Klein, Speedo, Chaps, Warner’s and Olga. Barclays explained, “Warnaco, on an absolute and relative basis to many of its peers, as compelling at just 11.1x FY12 EPS. While its European exposure remains a risk, we believe Warnaco, anchored by its Calvin Klein businesses, is positioned for global market share gains and long term revenue growth, with expansion into higher margin regions.” Barclays also maintained its overweight position on VF Corp (NYSE:VFC).
Macy’s, Inc. (NYSE:M): The Company’s retail stores sell a wide range of mid-to-high level merchandise, including men’s, women’s and children’s apparel and accessories, cosmetics, home furnishings and other consumer goods. Barclays recommends Macy’s for investors looking who prefer less international exposure, and believes the retailer will gain market share in 2012. Barclays also raised their price target from $35 to $40. Barclays maintained its equal weight position on JC Penny (NYSE:JPC).