U.S department stores' PTs lowered by BofA on weakening demand

Franchise

07/07/2022 15:53

** Analysts at brokerage BofA Global Research reduce their
price objectives on U.S. department stores by 35% to reflect
lower multiples given the difficult macro picture
    ** BofA also lowers fiscal 2022 estimates by 16% on average
for the group to reflect lower sales, as inflation is pressuring
consumption, and inventory build-ups squeeze gross margins
    ** With Kohl's  KSS.N  having ended sale talks with
Franchise Group, BofA downgrades the stock to "underperform,"
underlining concerns about its fundamentals
    ** BofA had reinstated a "neutral" rating on Kohl's in March
    ** The brokerage also forecasts a 32% drop in earnings
before interest and taxes (EBIT) in 2022 for the group,
excluding Dillard's  DDS.N , saying recession could hurt the
group more this time versus 2008
    ** In 2008, earnings before interest and taxes (EBIT) fell
by 15%-30% for most department stores - BofA
    
 Company     BofA's      Current     Previous
             rating      price       price
                         objective   objective
 Kohl's      Underperfo  $26         $50
  KSS.N      rm                      
 Macy's      Underperfo  $15         $22
  M.N        rm                      
 Nordstrom   Underperfo  $15         $21
  JWN.N      rm                      
 Dillard's   Underperfo  $150        $215
  DDS.N      rm                      
 
 (Reporting by Praveen Paramasivam)
 ((Praveen.Paramasivam@thomsonreuters.com;))