Citi downgrades several retail stocks, says 'stars now misaligned'

Carters

23/05/2022 14:10

** Shares of several apparel retailers fall in premarket
trading following a Citi downgrade that was sparked by
expectations of a hit to earnings from higher inventory levels 
    ** Citi says lack of stimulus as well as the burden from
higher food and fuel prices are driving down demand from
lower-income consumers, while fuel/supply chain costs due to the
Ukraine war are putting more pressure on the companies
    ** Weakening consumer demand for goods create a risk that
the apparel category will start to get much more promotional
over the next several quarters, said Citi analyst Paul Lejuez
and team 
    ** "We are lowering our earnings estimates across a wide
range of companies we believe are most at risk of seeing margin
declines in 2022" - Lejuez 
    ** Citi cuts Gap Inc  GPS.N  and Children's Place Inc
 PLCE.N  to "sell" from "neutral"; downgrades American Eagle
Outfitters  AEO.N , Abercrombie & Fitch  ANF.N , Kohl's Corp
 KSS.N , Ralph Lauren  RL.N  and Under Armour  UAA.N  to
"neutral" from "buy" (stocks down between 2.1% and 5.1% in
trading before the bell)
    ** Brokerage double downgrades Carters Inc  CRI.N  to "sell"
from "buy" (stock falls 3.3%)
    ** The S&P 500 retailing index  .SPXRT  fell for a ninth
straight week on Friday after industry bellwethers Target
 TGT.N  and Walmart  WMT.N  warned of inflation eating into
profits  urn:newsml:reuters.com:*:nL3N2XC2K2

 (Reporting by Sruthi Shankar)
 ((sruthi.shankar@thomsonreuters.com;))