Key insights
- Jefferies highlights stock selection in US fashion retail amid geopolitical uncertainty. Oil price volatility from the US-Iran conflict poses a risk, potentially impacting margins through freight and logistics costs. Sustained gasoline price increases could weigh on low-to-middle-income consumer spending, while rising cotton costs may affect denim retailers. Ralph Lauren remains the top pick, while VF Corp benefits from improved Vans data. Macy's continues to lag.
Jefferies comments on US fashion names amid SoH drama.
Investing.com - Jefferies provided an update on U.S. fashion retailers following first-quarter earnings results and management discussions, highlighting stock selection amid ongoing geopolitical uncertainty related to oil price volatility.
The firm reiterated Ralph Lauren (NYSE: RL) as its top pick in the sector, though noted that Europe performance and conservative fourth-quarter guidance require monitoring. Jefferies also reiterated a Buy rating on Levi Strauss (NYSE: LEVI) shares.
Deckers Outdoor (NYSE: DECK) stands out with potential for estimate upside and share buyback activity, according to the firm. Turnaround names Capri Holdings (NYSE: CPRI) and VF Corp (NYSE: VFC) have fully recovered, with VF Corp benefiting from improved Vans brand data. Macy's (NYSE: M) continues to lag despite comparable sales inflection.
Jefferies said a key investor concern remains whether oil volatility following the U.S.-Iran conflict represents a short-term cost shock or evolves into a longer-duration sales and freight headwind. Sentiment has improved in recent weeks on optimism for de-escalation, though the environment remains difficult to predict.
Higher oil prices can affect margins through elevated freight, fuel surcharges and logistics costs, with more modest impact on product costs such as synthetics, the firm said. Sustained gasoline price increases risk disproportionately weighing on low- to middle-income consumer spending, while rising cotton costs also warrant monitoring for denim retailers.