Which apparel stocks face tough Europe headwinds and a sector sleeper
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Wedbush Securities says the situation in Ukraine is a key sentiment overhang for the apparel sector, which could weigh even more heavily on the group going forward.
"Most notably, last week's news that Russian troops attacked a Ukrainian nuclear power plant seems to have been a 'game-changer' in the eyes of the public," noted analyst Tom Nikic.
Nikic and team dropped estimates and price targets on Adidas (OTCQX:ADDYY -2.9%), Deckers Outdoor Corporation (DECK -3.2%), Farfetch (FTCH -1.5%), Nike (NKE -1.5%), Skechers (SKX -4.0%) and V.F. Corporation (VFC -0.4%). Of that group, Farfetch (FTCH -1.5%) was noted to have the most direct exposure to Russia.
The actions on PVH (NYSE:PVH) and Ralph Lauren (NYSE:RL) were even more dramatic with both cut to Neutral ratings from Outperform. It was noted that PVH has the highest penetration of Europe sales in the group (~45%) and Ralph Lauren (RL) is also elevated (~28%). Both companies were called very reliant on European growth over the years.
On the positive side, an opportunity was seen with Carter's (CRI -0.5%) as it operates in the defensive baby clothes category with little exposure to Europe. Carter's (NYSE:CRI) also has birth and marriage trends working in its favor of late.
Dig into Farfetch's (NYSE:FTCH) SEC filing in which it highlighted its Russian Europe risk factors..
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