Needham initiates coverage on Specialty Retail with a focus on the activewear, luxury, and jewelry sectors. Digital disruption is the big theme across the space, as cos confront declining store traffic and the accelerating shift toward online commerce. While the specialty retail envm't is transitioning, firm views some cos as better positioned than others, and there are still growth opportunities, mostly abroad. Firm's Buy-rated companies include lululemon Atheltica (LULU, price target $67) and Oxford Industries (OXM, price target $68)—companies with a highly visible pathway to sales and earnings growth—and Signet Jewelers (SIG, price target $69)—a company that is relatively Amazon proof with low expectations. Firm has Hold ratings on Nike (NKE) and Tiffany & Co. (TIF)—companies that appear near fully valued—and Under Armour (UAA) and Ralph Lauren (RL)—companies whose sales and margin outlook has become less clear
Initiating coverage on specialty retail: Digital disruption is accelerating