In this article, we discuss the 5 retail stocks that Jim Duffy at Stifel is bearish on. If you want to read our discussion on the analysts’ forecasts for the sector, go directly to This Analyst is Bearish on These 15 Retail Stocks Amid ‘Soft Landing’ Expectations.
5. Levi Strauss & Co. (NYSE:LEVI)
Number of Hedge Fund Holders: 26
Levi Strauss & Co. (NYSE:LEVI) is a San Francisco, California-based apparel corporation.
On July 20, Jim Duffy at Stifel lowered the price target on Levi Strauss & Co. (NYSE:LEVI) from $26 to $23. The company posted its Q2 2022 results on July 7 and outperformed the consensus revenue and EPS estimates. While the analysts think that Levi Strauss & Co.’s (NYSE:LEVI) 2022 guidance remains prudent, they believe a weakening macroeconomic outlook could create challenges for the company in achieving its target.
During Q1 2022, Two Sigma Advisors lowered its stake in Levi Strauss & Co. (NYSE:LEVI) by 26%.
4. Crocs, Inc. (NASDAQ:CROX)
Number of Hedge Fund Holders: 30
Crocs, Inc. (NASDAQ:CROX) is a Broomfield, Colorado-based, globally renowned casual footwear company.
Duffy lowered the price target on Crocs, Inc. (NASDAQ:CROX) from $59 to $54. Being a member of the Softlines retail industry, Crocs, Inc. (NASDAQ:CROX) faces a risk of a slowdown in sales growth due to inflation. The stocks in the Softlines retail industry have already underperformed the S&P 500 Index since the start of the year. Crocs, Inc. (NASDAQ:CROX) is expected to experience more pressure as customers further reduce their consumption levels amid concerns of a recession.
As per Insider Monkey’s database of 912 hedge funds, Crocs, Inc. (NASDAQ:CROX) was held by 30 funds at the end of Q1 2022.
3. Lululemon Athletica Inc. (NASDAQ:LULU)
Number of Hedge Fund Holders: 44
Lululemon Athletica Inc. (NASDAQ:LULU) is a Vancouver, Canada-based athletic apparel brand.
Duffy slashed the price target on Lululemon Athletica Inc. (NASDAQ:LULU) from $500 to $381. A difficult macroeconomic outlook and a buildup in inventory are expected to create unfavorable circumstances for Lululemon Athletica Inc. (NASDAQ:LULU) during the second half of 2022. However, Lululemon Athletica Inc. (NASDAQ:LULU) has the benefit of having strong brand momentum and the opportunity to gain market share in the athletic apparel segment due to its growth strategies.
During Q2 2022, ARK Investment Management reduced its holding in Lululemon Athletica Inc. (NASDAQ:LULU) by 5%. The hedge fund only owns 469 shares in Lululemon Athletica Inc. (NASDAQ:LULU) now.
2. Under Armour, Inc. (NYSE:UA)
Number of Hedge Fund Holders: 47
Under Armour, Inc. (NYSE:UA) is a Baltimore, Maryland-based casual apparel, footwear, and sports equipment company.
The analyst at Stifel reiterated a Hold rating on Under Armour, Inc. (NYSE:UA) stock but lowered the target price from $13 to $10. There is a concern related to the volatility of the management, which could cause Under Armour, Inc. (NYSE:UA) to lag behind competitors in terms of revenue growth and EBIT margins. There is an expectation that Under Armour, Inc.’s (NYSE:UA) inventory position could worsen in the future compared to Q1 2022.
At the end of Q1 2022, 47 hedge funds held a stake in Under Armour, Inc. (NYSE:UA), down from 53 in the preceding quarter.
1. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 67
NIKE, Inc. (NYSE:NKE) is an Oregon-based accessory, apparel, equipment, and footwear company.
Duffy slashed the price target on NIKE, Inc. (NYSE:NKE) by $5 to $130. NIKE, Inc. (NYSE:NKE) posted its Q4 FY22 results and provided FY23 guidance on June 29. The company’s below consensus FY23 guidance reflects short-term inventory pressure from the Chinese market. The proprietary algorithm developed by NIKE, Inc. (NYSE:NKE) is expected to remain intact till FY25, but the stock offers limited upside due to the broad market slowdown.
NIKE, Inc. (NYSE:NKE) was mentioned in the Q4 2021 investor letter of ClearBridge Investments. Here’s what the firm said:
“Nike is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. Nike is also still underindexed to the women’s category, which we see as a significant ongoing catalyst.
Of the 912 hedge funds in Insider Monkey’s database, 67 funds held a stake in NIKE, Inc. (NYSE:NKE) as of Q1 2022.
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