1、Dept Stores/Specialty SoftlinesModel UpdateNorth America Equity Research23 January 2019Following recent holiday sales reports and company appearances at the ICRconference we are updating estimates on ANF, AEO, BOOT, FIVE, LULU, OLLI, SIG, TIF and URBN.Abercrombie & Fitch (ANF, Underweight). We updat

2、e our model following ANFs sales We now model 4Q18 EPS $1.12 equating to EPS of $0.94, FY19 EPS of $1.01, and FY20 EPS of $1.03. Our $19 PT is based on 4.0 x EV/FY20EAmerican Eagle Outfitters (AEO, Neutral). We update our model following AEOs sales report. We now model 4Q18 EPS of $0.42 equating to

3、FY18 EPS of $1.46, FY19 EPS of $1.73, and FY20 EPS of $2.04. Our $21 PT is based on 4.5x EV/FY20EBarn (BOOT, Overweight). We update our model following positive F3Q pre-announcement. We now model F3Q19 EPS of $0.66 and F4Q EPS of $0.26 equating to FY19 EPS $1.32, FY20 EPS $1.49, and FY21 EPS $1.80.

4、Our new $26 PT is based on 15x CY20E EPS (0.9x PEG).Five Below (FIVE, Overweight). We update our model following FIVEs sales report. We now model 4Q18 EPS of $1.58 equating to FY18 EPS $2.66, FY19 EPS of $3.19, and FY20 EPS of $3.87. Our new $139 PT is based on 1.75x PEG on 2019/20E EPS growth (or 3

5、6x FY20EEPS).lululemon athletica (LULU, Overweight). We update model following LULUs 4Q updated guidance. We now model 4Q EPS of $1.75 equating to FY18 EPS of $3.76, FY19 EPS of $4.60, and FY20 EPS of $5.58. We raise our PT to $182 ($180 prior) based on 33x FY20E EPS (1.5xPEG).Ollies Bargain Outlet

6、(OLLI, Overweight). We update our model following OLLIs holiday sales and ICR meetings. We now model 4Q18 EPS $0.70 equating to FY18 EPS $1.82, FY19 EPS $2.16, and EPS of $2.55. Our$87 PT is based on 34x FY20E EPS (or 1.8x PEG on 2019/20E NI).Retailing/Department Stores & Specialty SoftlinesMatthew

7、R. Boss, CPA AC(1-212) 622-2630 HYPERLINK mailto:matthew.boss matthew.bossBloomberg JPMA BOSS Steven Zaccone, CFA(1-212)622-8996 HYPERLINK mailto:steven.zaccone steven.zaccone Aaron T Grey, CFA, CPA (1-212)622-4967 HYPERLINK mailto:aaron.t.grey aaron HYPERLINK mailto:.t.grey .t.greyGrace Smalley(1-2

8、12) 622-4894 HYPERLINK mailto:grace.smalley grace.smalleyJ.P. Morgan Securities LLCEquity Ratings and Price TargetsCompanyTickerMkt Cap ($ mn)Price ($) Rat Curing PrevCur Price TEnd Datearget PrevEnd DateAbercrombie & FitchANF US1,393.3620.07UWn/c19.00Dec-19n/cn/cAmerican Eagle OutfittersAEO US3,664

9、.6920.33Nn/c21.00Dec-19n/cn/cBoot BarnBOOT US624.2121.87OWn/c26.00Dec-1923.00n/cFive BelowFIVE US6,812.20122.17OWn/c139.00Dec-19129.00n/clululemon athletica inc.LULU US20,264.84149.47OWn/c182.00Dec-19180.00n/cOllies Bargain Outlet HoldingsOLLI US4,811.0473.90OWn/c87.00Dec-19n/cn/cSignet JewelersSIG

10、US1,308.3223.94Nn/c27.00Dec-1938.00n/cTiffany & Co.TIF US10,958.7687.60Nn/c92.00Dec-1994.00n/cUrban OutfittersURBN US3,510.7031.99Nn/c36.00Dec-1938.00n/cSource: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 22 Jan 19.See page 22 for analyst certification and impor

11、tant disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single fac

12、tor in making their investment decision. HYPERLINK / Matthew R. Boss, CPA (1-212) 622-2630 HYPERLINK mailto:matthew.boss matthew.bossNorth America Equity Research23 January 2019Signet (SIG, Neutral). We update our model following SIGs print. now model 4Q19 EPS of $3.87 equating to FY19 EPS of $3.78.

13、 For FY20 we model EPS of $3.39. We lower our price target to $27 ($38 prior) based on EV/EBITDA.Tiffany & Co. (TIF, Neutral). We update our model following TIFs Holiday print. We now model 4Q18 EPS of $1.63 equating to FY18 EPS of $4.70. For FY19 we model EPS of $4.89. We lower our price target to

14、$92 ($94 prior) based on 17xEPS.Urban Outfitters (URBN, Neutral). We update our model following URBNs holiday sales report. We now model 4Q EPS $0.79 equating to FY18 $2.71, FY19 EPS of $2.85, and FY20 EPS of $3.10. We lower our price target to$36 based on 5.0 x EV/FY20E EBITDA.UnderweightAbercrombi

15、e & FitchAbercrombie & Fitch Co. (ANF;ANF US)CompanyDataPrice ($)20.07FYE Jan2017A2018E(Prev)2018E(Curr)2019E(Prev)2019E(Curr)2020E(Prev)2020E(Curr)Date Of Price22 Jan 19EPS (Operating) ($)52-week Range ($)29.69-15.28Q1 (Apr)(0.90)(0.56)A(0.56)AMarket Cap ($ mn)1,393.36Q2 (Jul)(0.16)0.06A0.06AFiscal

16、 Year EndJanQ3 (Oct)0.300.33A0.33AShares O/S (mn)69Q4 (Jan)1.381.131.12Price Target ($)Price Target EndDate19.0031-Dec-19 FYBloomberg EPS FY ($)0.660.390.96-0.940.961.00-1.011.121.07-1.031.26Source: Company data, Bloomberg, J.P. Morgan estimates.Investment Thesis, Valuation and Risks Abercrombie & F

17、itch (Underweight; Price Target: $19.00) Investment ThesisFacing severe secular challenges, ANF is in the midst of a major brand buildinginitiative to regain customers and return to a growth profile. After cutting $350M in expenses over the last 3-4 years, we believe ANFs earnings power going forwar

18、d is increasingly dependent on the companys ability to drive positive comps, which appears increasingly too difficult in the worsening retail backdrop. We are not convinced that ANF will see an inflection point in comps on a sustainable basis and see consistent EBITDA declines for the years ahead.Va

19、luationOur Dec 19 price target of $19 is based on 4.0 x our 2020E EBITDA (EBIT + D&A at 3.6% of sales, in line with specialty peer group avg.). The 4x EBITDA is about in line with the companys 5-year average given top-line stabilization and improved trajectory for 2018.Risks to Rating and Price Targ

20、etThere is a risk that we have underestimated the upside potential to ANFs SSS and earnings outlook and, in turn, stock price relative to market expectations, and therefore our price target. Some company-specific factors include the companys ability to hit fashion trends as well as exogenous factors

21、 such as traffic levels and the industry-wide level of promotions that could drive upside to results.NeutralAmerican Eagle OutfittersAmerican Eagle Outfitters (AEO;AEO US)CompanyDataPrice ($)20.33FYE Jan2017A2018E(Prev)2018E(Curr)2019E(Prev)2019E(Curr)2020E(Prev)2020E(Curr)Date Of Price22 Jan 19EPS

22、(Operating) ($)52-week Range ($)29.88-16.14Q1 (Apr)0.160.23A0.23AMarket Cap ($ mn)3,664.69Q2 (Jul)0.190.34A0.34AFiscal Year EndJanQ3 (Oct)0.370.48A0.48AShares O/S (mn)180Q4 (Jan)0.440.430.42Price Target ($)Price Target EndDate21.0031-Dec-19 FYBloomberg EPS FY ($)8-1.461.471.73-1.731.621.99-2.041.74S

23、ource: Company data, Bloomberg, J.P. Morgan estimates.Investment Thesis, Valuation and RisksAmerican Eagle Outfitters (Neutral; Price Target: $21.00)Investment ThesisAEO is regaining traffic and sales momentum with core customers, driven by the strength of its denim business. We rate AEO shares Neut

24、ral as we are concerned that the highly competitive teen retail industry will continue to consolidate and experience pricing pressure as fast fashion competitors continue to lower the initial ticket bar, limiting AEOs ability to sustain sales productivity levels and margins.ValuationOur Dec 2019 pri

25、ce target of $21 is based on 4.5x our FY20E EBITDA, which represents a 100bps discount to AEOs historical five-year average based on concerns of the highly competitive teen retail industry.Risks to Rating and Price TargetThere is risk that we have over/underestimated the downside/upside potential to

26、 AEOs earnings outlook and, in turn, stock price relative to market expectations, and therefore our price target. Some company-specific factors include AEOs ability to hit fashion trends as well as exogenous factors such as traffic levels and competitive environment in the teen space.OverweightBoot

27、BarnBoot Barn Holdings, Inc. (BOOT;BOOT US)CompanyDataPrice ($)21.87FYE Mar2018A2019E(Prev)2019E(Curr)2020E(Prev)2020E(Curr)2021E(Prev)2021E(Curr)Date Of Price22 Jan 19EPS (Operating) ($)52-week Range ($)31.61-15.01Q1 (Jun)0.030.24A0.24AMarket Cap ($ mn)624.21Q2 (Sep)0.040.16A0.16AFiscal Year EndMar

28、Q3 (Dec)0.730.620.66Shares O/S (mn)29Q4 (Mar)6Price Target ($)26.00FY1.051.271.321.431.491.731.80Price TargetEndDate31-Dec-19 CY-Bloomberg EPSFY($)0.70-1.29-1.47-1.78Source: Company data, Bloomberg, J.P. Morgan estimates.Investment Thesis, Valuation and Risks Boot Barn (Overweight; Price Target: $26

29、.00) Investment ThesisBOOT is the #1 player (over 2.5x as many stores as its closest competitor) in ahighly fragmented $20B western/work wear market that is seeing improved trends in 35% of its store base (oil/gas & Texas) after 2 straight years of underperformance due to improving macro conditions.

30、 With about 90% of sales at full-price, 30% assortment work wear, and its western offering differentiated given its niche positioning (and destination nature of its base), BOOT targets steady merchandise margin improvement over time combined with low fixed-cost hurdles to drive EBIT margin expansion

31、 toward 10%+ over time. sq ft prospects, 500-store target vs. 225 today allows BOOT to more than double its current store base having not yet tapped into the Mid-Atlantic, parts of the Midwest, and NY market. We see the return to SSS of LSD-MSD and unit growth of 10% equating to mid-teens EBITDA and

32、 20%+ annual EPSgrowth.ValuationWe raise our Dec 19 price target to $26 (was $23) based on 15.0 x our CY20E EPS a 0.9x PEG (= PEG average since IPO) to BOOTs EPS growth profile the next two years.Risks to Rating and Price TargetThe economic climate, particularly the employment picture, can affect co

33、nsumer spending and the specialty retail industry. BOOT in particular is at risk to fluctuations in oil prices given 35% of its store base is in oil/gas-centric regions, including Texas. A significant decline in the price of oil could drastically impact employment situations in these markets and, th

34、us, could cause BOOT sales trends to decelerate below our current assumptions. Additionally, as with any fast-growing retailer, there is execution risk related to an aggressive store rollout plan.OverweightFive BelowFive Below, Inc. (FIVE;FIVE US)CompanyDataFYE Jan2016A2017A2018E2019E2020EPrice($)12

35、2.17EPS (Operating) ($)DateOfPrice22 Jan19Q1 (Apr)9A-52-weekRange($)136.13-60.00Q2 (Jul)0.180.300.45A-Market Cap($mn)6,812.20Q3 (Oct)4A-FiscalYearEndJanQ4 (Jan)0.901.211.58-SharesO/S (mn)56FY1.301.842.663.193.87PriceTarget($)139.00Price TargetEndDate31-Dec-19 Source: Company data, Bloomberg, J.P. Mo

36、rgan estimates.Investment Thesis, Valuation and Risks Five Below (Overweight; Price Target: $139.00) Investment ThesisOver the past five years, FIVE has generated a +25% top-line CAGR with unitgrowth (22% five-year CAGR) at year 1 productivity exceeding 90%, driving 84% of the growth over average. L

37、ooking forward, FIVE targets 20% annual revenue growth on high-teens unit growth expansion and low-single-digit comps (i.e., +3.0%) with roughly flat margins and a 3% fixed cost hurdle equating to 20% net income growth. Importantly, we see high visibility to +20% annual net income growth based on (1

38、) high-teens unit growth with new store returns the sole governor, (2) low-single-digit “core” comps (ex craze trends) on positive store traffic, and (3) margin expansion driven by scale citing opportunity to reduce todays +3% fixed cost hurdle over time.ValuationWe raise our Dec-2019 price target t

39、o $139 ($129 prior) based on 36x our FY20E EPS, representing a 1.75x PEG on our FY19/FY20 model and managements long- term annual 20% net income growth profile representing a premium to 1.5x 2020E growth peer average (but discount to the 2.0 x 2019E growth average PEG).Risks to Rating and Price Targ

40、etThe economic climate, particularly the employment picture, can affect consumer spending and the dollar store industry. A greater than expected downturn in household spending could cause sales trends in discretionary to decelerate below our current assumptions, rendering our estimates too high. A c

41、hange in the competitive environment among apparel manufacturers or retailers could negatively impact same- store sales growth. Specifically, increased promotional activity among peers could lead to decelerating sales or markdowns, impacting profitability and causing us to lower our projections. FIV

42、Es ability to recognize and capitalize on trends in the teen community could materially affect the companys sales performance. Furthermore, given the nature of FIVEs business relying on fads and trends, this can cause some volatility in quarterly results, making it difficult to predict. The companys

43、 inability to recognize a trend and work with vendors to get the product in store could negatively impact projections. As a fast growing retailer, there is execution risk related to an aggressive store rollout plan. FIVE is targeting high-teens sq. ft. growth per through 2020 and to 2,500 stores ove

44、r time. With only 625 stores today and a target of 4x its current base, there is the risk that management is overestimating the availability of appropriate real estate or underestimating the competitivebackdrop.Overweightlululemon athletica inc.lululemon athletica inc. (LULU;LULU US)CompanyDataPrice

45、 ($)149.47FYE Jan2017A2018E(Prev)2018E(Curr)2019E(Prev)2019E(Curr)2020E(Prev)2020E(Curr)Date Of Price22 Jan 19EPS (Operating) ($)52-week Range ($)164.79-74.90Q1 (Apr)0.320.55A0.55AMarket Cap ($ mn)20,264.84Q2 (Jul)0.390.71A0.71AFiscal Year EndJanQ3 (Oct)0.560.75A0.75AShares O/S (mn)136Q4 (Jan)1.331.

46、731.75Price Target ($)Price Target EndDate182.0031-Dec-19 FYBloomberg EPS FY ($)2.592.533.73-3.763.734.58-4.604.385.52-5.585.11Source: Company data, Bloomberg, J.P. Morgan estimates.Investment Thesis, Valuation and Riskslululemon athletica inc. (Overweight; Price Target: $182.00)Investment ThesisWit

47、h lulus brand still having a place domestically and International an untapped opportunity (just 6% of today), our top-line build points to $4B by FY20 (vs. $2.0B in FY15) supported by (1) mid-teens footage growth (56 units in FY15 vs. 48 in FY14) comprising 30 NA units/year (to 350 saturation vs. 23

48、7 today), 40 units in Europe/Asia by FY17 and gains of 30-40 units thereafter; (2) mid-single-digit same- store sales; (3) a push into newer categories such as mens (13-14% of sales); and (4) ongoing growth in the ecommerce business.ValuationWe raise our December 2019 price target to $182 ($180 prio

49、r) based on 33x our FY20E EPS reflecting 1.5x PEG slightly above the 1.4x global brands average. LULUs premium multiple to its 5-year average of 25x reflects increased conviction in the companys 2020 revenue target of $4B, incremental e-commerce growth drivers, and untapped Intl revenue opportunity.

50、Risks to Rating and Price Targethas a sq. growth the and to product is to a 55% 25% vs. of the for and in of the and are to if the top- line OverweightCompanyDataOllies Bargain Outlet HoldingsOllies Bargain Outlet Holdings, Inc. (OLLI;OLLI US)FYEJan2016A2017A2018E2019E2020EPrice ($)73.90EPS (Operati

51、ng) ($)Date Of Price22 Jan 19Q1 (Apr)1A-52-week Range ($)97.61-50.65Q2 (Jul)0.210.270.40A-Market Cap ($ mn)4,811.04Q3 (Oct)2-Fiscal Year EndJanQ4 (Jan)0.390.510.70-Shares O/S (mn)65FY0.971.251.822.162.55PriceTarget($)87.00Price TargetEndDate31-Dec-19 Source: Company data, Bloomberg, J.P. Morgan esti

52、mates.Investment Thesis, Valuation and RisksOllies Bargain Outlet Holdings (Overweight; Price Target: $87.00)Investment ThesisWe view Ollies as a multi-year growth story in a $65B closeout market with mid- teens top-line growth driven by mid-teens sq. ft. (950 over time = 5x current base) and 1-2% S

53、SS growth (1.5% five-year historical average) combined with margin stability (flat GPM with SG&A leverage at 1-1.5%) and debt pay-down through FY17 (to 2.0-2.5x leverage) equating to a 20% long-term earnings growth algorithm. Importantly, we believe Ollies execution history provides roadmap credibil

54、ity, achieving 17% top-line growth (16.3% sq. ft. growth + 1.5% SSS growth) and 16% EBITDA growth the past five years.ValuationOur $87 Dec19 price target is based on 34x our FY20 EPS estimate, which represents a 1.8x PEG on our 19-20% NI growth model in FY19/20 (or 1x PEG on OLLIs trailing 3-year EP

55、S growth). We see this premium valuation reasonable given OLLIs consistent beat-and-raise story, finishing an average 12% above the high end of initial guidance over the past three years (and average 35%+ EPS growth).Risks to Rating and Price TargetThe economic climate, particularly the employment p

56、icture, can affect consumer spending and the off-price industry. With average household income of $50K, increased economic pressures (i.e., higher gas prices) could cause Ollies sales trends to decelerate below our current assumptions, rendering our estimates too high. An increased competitive lands

57、cape among global apparel manufacturers or retailers could negatively impact same-store sales growth. Specifically, increasedpromotional activity among peers could lead to decelerating sales or markdowns, impacting profitability and causing us to lower our projections. Ollies ability to source compe

58、lling closeout merchandise could materially affect the companys sales performance. Additionally, given the inconsistent nature of the closeout business, this can cause some volatility in the companys quarterly results, making it difficult to predict. Any lack of closeouts could render our estimates

59、too aggressive, forcing us to lower our projections. As with any fast-growing retailer, there is execution risk related to an aggressive store rollout plan. OLLI is targeting 15%+ sq. ft. growth per year to 950 stores over time. With only 234 stores today and a target of 5x its current base, there i

60、s the risk that management is overestimating the availability of appropriate real estate or underestimating the competitivebackdrop.NeutralSignet JewelersSignet Jewelers Limited (SIG;SIG US)CompanyDataPrice ($)23.94FYE Jan2016A2017A2018A 2019E 2019E(Prev) (Curr)2020E(Prev)2020E(Curr)2021E(Prev)2021E