European Apparel Retail: Winners adapt to changing consumer habits, says DB

ABOUT YOU Holding SE

25/08/2021 09:42

** Deutsche Bank initiates coverage of European apparel
sector saying it prefers companies which have adapted to
changing consumer habits after COVID-19 pandemic
    ** DB says it favours retailers with online and marketplace
focus, and believes platform monetisation is key for profit
growth
    ** "We believe that COVID has seen a step change in online
penetration with five years of online adoption in one year,"
brokerage adds
    ** It expects trend in consumer spend shift towards leisure
to continue, which will further pressure long-term clothing
sales
    ** DB initiates ASOS  ASOS.L , boohoo  BOOH.L , M&S  MKS.L ,
and Next  NXT.L  with "buy", while re-iterating "buy" on Zalando
 ZALG.DE  and About You  YOUG.DE , as it believes consumers will
increasingly want to shop on multi-brand online marketplace
    ** Broker starts Inditex  ITX.MC  and H&M  HMb.ST  with
"sell", saying companies need to adapt much further to maintain
the existing sales base and margin structure
    ** "... the large clothing brands will have to increase
their marketing budget to retain consumers or decide to sell
their ranges via third parties" brokerage adds
    ** DB upgrades Puma  PUMG.DE  and Adidas  ADSGn.DE  to "buy"
from "hold" as it sees structural tailwinds will support growth
in sporting goods and athleisure category ahead of global
clothing segment
    ** It initiates ABF  ABF.L  with "hold", as downside risk is
limited due to limited post-COVID recovery share price gain

 (Reporting by Tommy Lund)
 ((Tommyalexander.lund@thomsonreuters.com))