Dismal guidance from L Brands (LB -15.7%) is taking shares of other mall retailers lower. Kohl's (KSS -0.1%) also delivered an uninspiring Q4 earnings report, although it topped estimates.
While a surprising 20% drop in comparable sales for the once-resilient Victoria's Secret was alarming, the broader theme impacting the sector is that L Brands is having trouble selling soap, candles and higher-margin bras amid lower mall traffic.
Notable decliners include Urban Outfitters (URBN -2.5%), American Eagle Outfitters (AEO -2.3%), Nordstrom (JWN -2.7%), Stein Mart (SMRT -1.6%), Buckle (BKE -2.8%), Tilly's (TLYS -1.4%), J.C. Penney (JCP -2.1%), Abercrombia & Fitch (ANF -2%), Gap (GPS -1.7%), Tailored Brands (TLRD -0.4%) and Express (EXPR -2.2%).
Cowen and Company lowers its price target on Nordstrom (JWN -0.2%) to $50 from $64, while keeping an Outperform rating in play. The new PT from Oliver Chen is based off of a clipped Q4 EPS estimate of $1.12 vs. $1.16 consensus.
Chen's Q4 take: "Redeeming features include JWN entering 4Q with clean inventories (+0.4% y/y vs. revenue growth of +6.4%), traditionally JWN has not articulated incoming tourism risk from the stronger dollar, and the S&P performance was actually quite strong in 2016 (+9.5%) – so JWN’s core full price customer could be just fine."
The analyst prefers JWN over sector peers JCP, M and KSS.
The bull-to-bear ratio on Wall Street is almost evenly split (8 Buys, 12 Holds, 7 Sells).
A plan by Amazon (NASDAQ:AMZN) to sell its own line of bras and intimate apparel off its website will be closely watched by the retail sector to see if one of the last of the e-commerce holdout categories finally succumbs. The Wall Street Journal broke the news on Friday and tips that the Amazon line could be introduced within a few weeks.
Some industry insiders think Amazon will have a hard time selling to first-time customers who want to feel and touch their lingerie products, while others warn that the sub-$10 pricing from the Seattle company could rattle the bra market as Generation Z factors in.
Calvin Klein (NYSE:PVH), Victoria's Secret (NYSE:LB), Target (NYSE:TGT), Nordstrom (NYSE:JWN) and American Eagle Outfitters (NYSE:AEO) are a few of the companies that could be impacted by the new Amazon apparel push.
Trump-branded consumer products have suffered new blows, with Sears (NASDAQ:SHLD) and Kmart discontinuing online sales of 31 Trump Home items.
The retailers said their decision was part of a push to focus their online business on the most profitable items.
New details have also emerged showing Ivanka Trump's fashion line tumbling 32% at Nordstrom (NYSE:JWN) last fiscal year, with the declines deepening more than 70% around the U.S. presidential election.
The White House has defended President Trump's criticism of Nordstrom (NYSE:JWN) saying the firm's decision to drop his daughter Ivanka's clothing line for the coming season was a politically motivated attack.
"I think this was less about his family's business than an attack on his daughter," spokesman Sean Spicer told a news briefing.
Nordstrom says its decision was based on performance.
Nordstrom (NYSE:JWN) won't be selling Ivanka Trump's merchandise in its stores for the spring season, but the department store denied any political motivation or connection with anti-Trump activist group called "Grab Your Wallet."
"Each year we cut about 10% [of brands] and refresh our assortment with about the same amount," Nordstrom said. "In this case, based on the brand's performance we've decided not to buy it for this season."