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.)
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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;
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