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Consumer Discretionary – Company Presentation

Consumer Discretionary – Company Presentation. Claudia Castro Lalit Chopra Marc Davis. Dan Feldmann Irini Girgis Paul Howlett. Outline. Recommendation Abercrombie Overview Kohl’s Overview Other Holdings. Recommendation. Sector: Overweight Consumer Discretionary Key Drivers

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Consumer Discretionary – Company Presentation

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  1. Consumer Discretionary – Company Presentation Claudia Castro Lalit Chopra Marc Davis Dan Feldmann Irini Girgis Paul Howlett

  2. Outline • Recommendation • Abercrombie Overview • Kohl’s Overview • Other Holdings

  3. Recommendation • Sector: • Overweight Consumer Discretionary • Key Drivers • Consumer spending improving, interest rates very low. • Financial Analysis • Decent revenue growth, earnings & margins weak. Margin improvement likely in both margins and spending. • Valuation • Ratios and relative charts indicate sector properly valued. • Companies: • Sell Abercrombie • Replace with Kohl’s • Maintain Lowes, McDonalds, Panera

  4. Abercrombie & Fitch

  5. Business Analysis • Businesses: • Retail Clothing • Manufacturing • Distribution • Main Products • Abercrombie & Fitch • abercrombie • Hollister

  6. Abercrombie Cash Flow Analysis

  7. Abercrombie DuPont

  8. Abercrombie Valuation Analysis

  9. Abercrombie Valuation Analysis

  10. Recommendation • Sell all of our position in A&F • Falling same-store sales (-6%) • Despite double digit sales growth at Hollister • Possible self-cannibalization from Hollister • Lowered its Q2 estimated earnings from .35 to .30

  11. Kohl’s

  12. Business Analysis • Businesses • Retail • Distribution • Sales • Products • Moderately priced apparel, shoes, accessories and home products

  13. Kohl’s Cash Flow Analysis

  14. Kohl’s Dupont Analysis

  15. Kohl’s: Valuation Analysis

  16. Kohl’s Valuation Analysis

  17. Recommendation • Buy Kohl’s • Use profits from sale of A&F • Why? • Huge buying opportunity (stock recently took a hit) • Record sales (up 13.2% to $2.12 billion) • Profits up 4.1% YOY

  18. Other Holdings • Lowes • McDonalds • Panera

  19. Final Recommendation • Sell Abercrombie • Replace with Kohl’s • Maintain Lowes, McDonalds, Panera

  20. QUESTIONS???

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