Northcoast Research thinks Signet Jewelers (SIG +0.6%) could be closing in on a sale of its credit business.
"We estimate that sale price in such a transaction could approach $1.275B. Assuming they pay off the corresponding line of credit of $600M, this would leave $675M of net proceeds that could be used for stock buyback, and could provide over $0.80 in accretion," advises analyst Jeff Stein.
Some major store chain names are lower after the retail sales report this morning showed weakness in some key categories and GameStop issued disappointing sales numbers for the holiday period.
Best Buy (BBY -0.7%), Wal-Mart (WMT -1%), Target (TGT -1.3%), Signet Jewelers (SIG -3%), J.C. Penney (JCP -1.6%), Nordstrom (JWN -1.4%) and Conn's (CONN -4%) are some of the stocks in the retail sector that are trailing market averages.
Earlier today, Stifel's Lindsay Piegza told Seeking Alpha that consumers are waiting for the proof of the Trump GDP breakout amid the reality of higher healthcare costs. At least for today, some investors may be doing the same.
Wells Fargo walks away from the ICR Conference with the view that the retail sector is close to "uninvestable" in the near term.
The investment firm notes the 2016 holiday season was set up for solid numbers off of favorable weather patterns and easy comparisions to 2015.
The two-week long of guidance cuts across the sector has ended that vision.
Lululemon (NASDAQ:LULU), TJX Companies (NYSE:TJX), Ross Stores (NASDAQ:ROST), Burlington Stores (NYSE:BURL) and Ulta Salon (NASDAQ:ULTA) are singled out as the only names coming out of ICR with some optimism.
Black Friday weekend channel checks from investment firms are still pouring in. A few tidbits are posted below.
Wells Fargo: Lululemon (NASDAQ:LULU) was a traffic outperformer, while Calvin Klein (NYSE:PVH) and Carter's (NYSE:CRI) held the line on pricing amid a promotional atmosphere.
Wedbush: High-profile video games were discounted more than last year. Keep an eye out on GameStop (NYSE:GME), Activision Blizzard (NASDAQ:ATVI), Take-Two (NASDAQ:TTWO) and Electronic Arts (NASDAQ:EA).
Fung Global Retail & Technology: Shoes (FL, FINL) were identified as a hot seller, while jewelry (NYSE:SIG) sales were down.
Jefferies: Unexpected strength for the UGG brand (NASDAQ:DECK) and Gap was observed. Demand for Michael Kors (NYSE:KORS) and Coach (NYSE:COH) handbags appeared soft.
Retailers want the U.S. election over and quick. The negative tone has created a degree of uncertainty with consumers that has impacted spending and traffic patterns, according to a host of top execs.
"There is just great uncertainty as to what is going to happen in the U.S. in particular as a result of the outcome of the election," noted Yum Brands (NYSE:YUM) CEO Greg Creed recently. "People may be hunkering down a little bit," he added.
Expect the topic to be raised on a large number of Q3 earnings calls over the next month to explain away revenue misses.
It's not an excuse that everyone is buying into. Retail Metrics president Ken Perkins doubts that daily shopping needs are cut short by election fascination and notes consumer confidence is measuring high. Then there's Amazon (NASDAQ:AMZN) which seems to be rolling right along without any Clinton-Trump fatigue.
Beyond the election wildcard, two underestimated factors impacting some retailers in a more concrete way are the lower level of SNAP (food stamps) benefits being paid out by the government and the elevated cost of health care. There is also the massive challenge with a millennial generation that shuns chains. Just ask anyone in the restaurant sector (NASDAQ:BITE).
Add it all up and it makes for a challenging period for a mix of retailers that includes Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR), Fred's (NASDAQ:FRED), Ross Stores (NASDAQ:ROST), Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Staples (NASDAQ:SPLS), McDonald's (NYSE:MCD), Popeyes Louisiana Kitchen (NASDAQ:PLKI), Wendy's (NYSE:WEN), Supervalu (NYSE:SVU), Kroger (NYSE:KR), SIgnet (NYSE:SIG), TJX Companies (NYSE:TJX), and Casey's General Stores (NASDAQ:CASY).