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Retailers should make safe plays outside of department stores: Analysts

Kate Spade bags on sale at Macy's in New York.
Scott Mlyn | CNBC

Sellers should revise inventory strategy and avoid relying so much on department stores, said some analysts.

Some retail brands had tough quarters like Kate Spade, which fell 18 percent after a huge earnings miss on Wednesday and Nordstrom, which tumbled 15 percent over the past three months. The former slashed its full-year forecast of net sales to $1.37 billion to $1.40 billion from $1.39 billion to $1.41 billion.

But Dana Telsey, CEO of Telsey Advisory Group, and Simeon Siegel, analyst at Nomura, are both bullish on a Kate Spade recovery.

The handbag maker is relatively young, not as exposed to department store channels such as brands like Michael Kors and can drive sales with novelty products, Telsey said Thursday on CNBC's "Power Lunch. "

"At the end of the day, there was a headline miss on the same store sales number ... total sales actually beat the street. The North American Kate Spade business grew 17 percent, so it's not a company that's shrinking. There's a lot of noise within there," Siegel said on "Power Lunch."

Retail brands could suffer if their offerings are largely contingent on department stores, the analysts said. Department stores want to have "clean" inventories, or have an appropriate amount for sales, so vendors should look to other distribution channels for stability, they said.

"When you think about the [retail] group, there's no question that anybody selling to department stores will feel that inventory pinch. Companies have already reset that bar. Michael Kors did it, Ralph Lauren recently did it. The idea of resizing and figuring out where the next lever of growth should come from seems to be very much along the investor and the corporate mind, " said Siegel.

Retailers need more "product innovation" into the back-to-school occasion and other holidays to grow sales, Telsey added.

On the other hand, consumers are winning, according to the analysts. They're taking advantage of the price deflation in apparel and tend to spend more on restaurants and experiences, according to Telsey.

"Being able to price compare on your phone allows a kind of ... price power leading to the consumer," said Siegel.