3 Apparel Winners This Holiday Season!
Black Friday, Cyber Monday, and the ever present, oh just please shop any day sales event, are in full effect, causing mayhem and fisticuffs across the country, and even across the pond. So what products will be in the carts of stiff arming, shouting, left hook throwing customers on their way to the check-out counters during the festive holiday season for 2014?
From initial reports, Black Friday’s revenues were down 0.5% to $12.29 billion (from $12.35 billion in 2013), and Thanksgiving store visits increased by 27.3%, while Black Friday store visits were down 5.6%, according to ShopperTrak. Further, the shopping research company found that, “In 2013, the Black Friday weekend produced a 1% gain, underperforming the 3.1% gain for the entire season. There is a significant amount of energy left in the consumer with 7 of the top 10 days of the year yet to come, including Super Saturday which is projected to be the number one shopping day of the year.”
This means that retailers have 7 large sales days including their number one sales day of the year still to come for this holiday season. Which means that significant revenues are still awaited by textile and apparel companies over the next few weeks of the shopping season.
Who to Look For
Columbia Sports (COLM) a Zacks Rank #1 (Strong Buy) posted their seventh consecutive positive earnings surprise, and their seventh consecutive positive revenue surprise at the end of October of this year. This sportswear company increased both their revenue and earnings guidance for FY 14. Further, management raised their dividend by 7% to $0.15, and their initial guidance for FY 15 is expecting double digit revenue growth. All great indicators of sustained growth for the company.
Columbia Sportswear Company is a global leader in design, sourcing, marketing and distribution of active outdoor apparel, and footwear with operations in North America, Asia, and Europe. The company is one of the largest outerwear companies in the world, and the leading seller of skiwear in the U.S.
As you can see from the Price and Consensus graph below, Columbia Sportswear has been following their consensus estimates pretty closely for the past several years. Further, the growth expectations for FY 14 and FY 15 have risen in anticipation to strong seasonal sales in Q4 14 and Q1 15.
What lady, or very fashionable man, does not want the cool stylings of Michael Kors, and his select brand of global accessories, footwear, or apparel? Like millions of others, the top 2 items on my finance’s gift list was a MK purse, and an MK wallet.
Michael Kors (KORS) is a Zacks Rank #2 (Buy) and offers two primary collections: the Michael Kors luxury collection, and the Michael Kors accessible luxury collection. They also offer select footwear, and outerwear through their accessible luxury collection. Further, the company also licenses their products and name to select partners.
In their most recent earnings announcement in early November, Michael Kors completed their seventh consecutive quarter with a both a positive earnings and positive revenue surprises. These solid beats caused management to increase both earnings and revenue guidance for FY15. Subsequently, estimates have risen for 11 coverage analysts over the past 30 days, increasing estimates from $4.05 to $4.17 for FY 15.
The Price and Consensus chart below shows Michael Kors’ consistent upward trend since its inception in 2011. The chart indicates that the current stock price is below the consensus analyst’s expectations for the remainder of 2014, and into 2015. A strong Holiday season, would put KORS right in line with expectations.
HanesBrands (HBI) a Zacks Rank #2 (Buy) is another apparel company that has had seven consecutive positive earnings surprises, and has posted a four quarter average positive surprise of 13.63%. Due to the consistent beats, and subsequent growth, HanesBrands raised their guidance after their most recent earnings announcement. Full year adjusted EPS guidance increased from a range of $5.40-$5.60 to a range of $5.55 to $5.65. Further, management increased guidance for adjusted operating profit from a range of $750 mm to $770 mm from a range of $735 mm to $755 mm.
The recent acquisition by HanesBrands to purchase DB Apparel in late September of this year, should start to see a positive impact on the top and bottom lines in the fourth quarter. The deal is expected to be immediately accretive to adjusted earnings, and is expected to add approximately $1.00 of adjusted EPS within three to four years, according to the company.
As you can see in the chart below, HanesBrands has produced solid growth in price and subsequently has seen their expected price to rise over the past two years.
Bottom Line
With the holiday shopping frenzy in full effect, it would be wise to look at some solid companies expecting significant inflows of revenue over the next 20 days. All three companies are well positioned to benefit from a solid holiday shopping season this year.
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COLUMBIA SPORTS (COLM): Free Stock Analysis Report
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