More Upside as Ralph Lauren, Coach Set Highs?
High-end retail showed strength Wednesday as shares of Ralph Lauren and Coach set all-time highs, but it wasn’t necessarily an indicator of the sector as a whole, “Fast Money” experts said.
UBS analyst Michael Binetti said Ralph Lauren, which reported better-than-expected results for its fiscal third quarter, were gaining traction in handbags and footwear, as well as taking share in the U.S. apparel market and growing internationally.
“They’ve really invested heavily in the brand over the last 10 years,” he said. “That is starting to bear fruit for them.”
The luxury sector appeared weakened last month after Tiffany trimmed its full-year guidance, but Binetti said that outlook was company-specific. Ralph Lauren looked strong, he added, even in Europe, where the company saw a growth rate in the teens and it was buying back licenses.
“They’ve really got a hell of a good growth opportunity around the world at this point compared to their peer group,” he said.
Coach, too, looked strong, Binetti said, noting that the company was expanding in China.
One challenge was a slowdown in its factory outlets in the United States.
“Otherwise, they’ve got a really great story,” he said.
Ralph Lauren gained more than 9 percent, closing at $171.49 per share after pulling back from its all-time high of $178.47.
Coach stock gained more than 1 percent to close at $73.21 per share; eariler it set a new high of $74.21.
Veracruz founder Steve Cortes said retail might be a good play for some investors.
“If you’re bullish the market broadly, I think you should be long these names because you actually tend to get a higher beta version of the S&P being long them,” he said. I will say, on the bearish side, what worries me the most about the retail sector is the performance of Amazon, which really used to be best in breed. It’s a company I still like fundamentally, but the technical have really broken down there.”
Cortes added that retail was “a bit of a puzzle.”
“Retail, too, I should point out, is a sector that is full of dispersion, meaning that it does not trade monolithically the way, say, XLE, for instance. Energy stocks tend to go all go up and down together,” he said. “Within retail, you have a lot of disparity, and we’re certainly seeing that in a very stark way right now.”
Trader Stephen Weiss was wary of JC Penney, which he thought had already priced in news of retail guru CEO Ron Johnson taking the helm.
Weiss said he owns Nordstrom and liked Macy’s for its luxury exposure via Bloomingdale’s.
“That’s another great name I would own,” he said.
(Ralph Lauren is scheduled to present its new fall collection at New York Fashion Week on Feb. 16.)
Got something to to say? Send us an e-mail at firstname.lastname@example.org and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to email@example.com.
Trader disclosure: On Feb. 8, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Kelly is long TLT; Kelly is long German bunds; Kelly is long SPY puts; Kelly is short Yen; Cortes is long Treasuries; Cortes is long SO; Cortes is long MO; Cortes is short SOHU; Cortes is short SINA; Cortes is short BAC; Cortes is short EUR; Cortes is short Silver; Weiss is long JWN; Weiss is long EUO; Weiss is long QCOM; Weiss is long DIS; Weiss is long MDRX; Weiss is long F; Weiss is long VZ; Weiss is long WLT; Weiss is long BKU; Weiss is long BKU; Weiss is long MOS; Weiss is long HAIN; Weiss is long KO; Weiss is long WLP; Weiss is long RIMM; Weiss is long ETP; Weiss is long NS; Weiss is short AAPL puts; Weiss is short AMZAN puts;
For Micheal Binetti
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.: Ralph Lauren
Within the past 12 months, UBS Securities LLC has received compensation from this company/entity: Ralph Lauren
For Jeff Kilburg
Killburg is long (TLT)
For Colin Gillis (MP)
(CSCO) Investment banking (next 3 months): BGC Financial LP and/or its affiliates, does not expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report.
Lead or Co-manager: BGC Financial LP and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities for Cisco within the last 12 months. BGC Financial LP and/or its affiliates has not received compensation for investment banking services in the last 12 months from Cisco.
For Jeff Houston
Research analysts, including those involved in the preparation of this report, received no direct compensation in connection with the firm’s investment ban king activities. Analyst compensation, which is ma de up o f salary and bonus, is based upon numerous factors including stock price performance, quality of analysis, and investor client feedback, as well as the overall profitability of the firm, which is impacted by all of the firm’s business activities and includes, among other things, institutional equity trading and investment banking services.
Investment banking services, as defined under NASD Rule 2711, includes, among other things, acting as an underwriter in or as a m ember of the selling group in a securities underwriting. The analyst responsible for this re port, Jeffrey L. Houston, CF A or a member of the analyst’s ho use hold does not own shares of the common stock of this company. N ASD Regulation ha s adopted rules that prohibit research analysts from trading in securities of covered companies during specified time periods before and after the publication of research reports.
For Rick Summer
For Matthew Czepliewicz (JB)
(MS) Collins Stewart produces different types of research product including, among others, fundamental equity analysis (which may contain fundamental and/or trading recommendations), technical analysis, Quest, and Investment Companies analysis. Recommendations contained in one type of research product may differ from recommendations contained in other types of research product, whether as a result of differing time horizons, methodologies or otherwise; it is possible that individual employees of Collins Stewart have different perspectives to this publication. No specific disclosures.