零售業(yè)-美國軟線零售商：受COVID-19影響下調(diào)PTs與EPS預(yù)期

1、Global Research30 April 2020US Softlines RetailRetailers: Lowering PTs and EPS Estimates Due to COVID-19We think there is further downside to Street estimates for US retailers:We adjust estimates and price targets for 10 retailers, incl. Department Stores, Off-Price and Specialty Retail. We think St

2、reet estimates currently do not reflect all the negative effects from COVID-19, particularly on industry gross margins. Our new FY20 EPS forecasts are 69% below consensus, on average. In some cases, we see EPS falling into negative territory. We dont think a sustained bull rally for Retailers happen

3、s until EPS estimates bottom and we anticipate further downward revisions. Looking long-term, we see significant upside case potential for these names if the COVID-19 situation ends sooner rather than later. Our preferred Buy idea for this group is AEO.We trim FY20 and FY21 EPS estimates 81% and 37%

4、, on avg., respectively: 1Q20 earnings so far have confirmed our expectations: lower sales, gross margin erosion and SG&A deleveraging. We believe Street estimates do not fully incorporate headwinds to gross margins from the inventory overhang caused by store closures. Our takeaway from a recent exp

5、ert call is FY20 gross margin dilution could reach 500 bps (Grim Specialty Retail Outlook). For these names, we forecast: 1) Sales fall significantly in 1H20, but gradually normalize in 2H. 2) Deep discounts used to clear excess inventory left over from 1H result in major gross margin pressure. 3) S

6、ignificant SG&A deleverage despite expense reductions. 4) Higher interest expenses as companies increase debt to address liquidity needs. We think earnings rebound in FY21, but not back to FY19 levels as COVID-19s ripple effects on the economy last into FY21. If stores dont reopen broadly by late Ma

7、y, our EPS forecasts are likely too high.We cut our price targets by 44%, on averageOur price target valuation methodology is unchanged. We use a multiples analysis, supported by a DCF analysis to value individual stocks. We apply P/E multiples within normal, 5-yr. historical ranges to our FY21 EPS

8、estimates. The P/E used is mostly based on our view of a companys growth potential once the COVID-19 situation normalizes. We are using P/Es near the low-end of historical ranges given elevated EPS risk.for these ten stocks. See below for a summary of our new PTs:We rate AEO Buy, keep 8 Neutrals and

9、 see the biggest downside to JWN (Sell).Figure 1: US Retailers Ratings and Price TargetsMarketFY21TargetPTImpliedTickerCompanyCap (US$ B)Old PTNew PTEPSeP/EUpsideEV/EBITDAAEOAmerican Eagle 1.4$20.00$10.00$1.0010 x23%6xBURLBurlington 12.7$240.00$180.00$6.9026x-4%19xFLFoot Locker 2.9$38.50$28.00$4.257

10、x10%7xGPSGap 3.3$18.00$8.00$1.356x-7%7xJWNNordstrom 3.5$30.00$14.00$1.4010 x-32%6xKSSKohls 3.2$48.00$18.00$1.8010 x-9%6xLBL Brands 3.5$25.00$14.00$1.1013x11%11xMMacys 1.9$14.50$6.00$0.758x0%6xROSTRoss Stores 34.6$124.00$86.00$4.5019x-7%14xTJXTJX Companies 61.9$68.00$48.00$2.5019x-2%14xSource: UBS Re

11、search.Retailers, SpecialtyAmericasEquitiesJay Sole Analyst HYPERLINK mailto:jay.sole jay.sole+1-212-713 3559Mauricio Serna, CFAAnalyst HYPERLINK mailto:mauricio.serna mauricio.serna+1-212-713 9028Megan Foo Associate Analyst HYPERLINK mailto:megan.foo megan.foo+1-212-713 3013 HYPERLINK /investmentre

12、search /investmentresearchThis report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 68. UBS 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 o

13、f interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.Contents HYPERLINK l _TOC_250023 Price Target and EPS Changes in Pictures 3 HYPERLINK l _TOC_250022 AEO (Buy) 5Estimate Changes Our new FY20

14、EPS estimate is $0.15 6 HYPERLINK l _TOC_250021 Valuation We use a 10 x P/E to value AEO 8 HYPERLINK l _TOC_250020 BURL (Neutral) 11Estimate Changes Our new FY20 EPS estimate is $0.85 12 HYPERLINK l _TOC_250019 Valuation We use a 26x P/E to value BURL 14 HYPERLINK l _TOC_250018 FL (Neutral) 17 HYPER

15、LINK l _TOC_250017 Estimate Changes Our new FY20 EPS estimate is $0.60 18Valuation We use a 7x P/E to value FL 20GPS (Neutral) 23Estimate Changes Our new FY20 EPS estimate is ($0.60) 24 HYPERLINK l _TOC_250016 Valuation We use a 6x P/E to value GPS 26 HYPERLINK l _TOC_250015 JWN (Sell) 29 HYPERLINK

16、l _TOC_250014 Estimate Changes Our new FY20 EPS estimate is ($2.20) 30 HYPERLINK l _TOC_250013 Valuation We use a 10 x P/E to value JWN 32 HYPERLINK l _TOC_250012 KSS (Neutral) 35 HYPERLINK l _TOC_250011 Estimate Changes Our new FY20 EPS estimate is ($0.90) 36 HYPERLINK l _TOC_250010 Valuation We us

17、e a 10 x P/E to value KSS 38 HYPERLINK l _TOC_250009 LB (Neutral) 41 HYPERLINK l _TOC_250008 Estimate Changes Our new FY21 EPS estimate is ($0.35) 42 HYPERLINK l _TOC_250007 Valuation We use a 13x P/E to value LB 44 HYPERLINK l _TOC_250006 M (Neutral) 48 HYPERLINK l _TOC_250005 Estimate Changes Our

18、new FY20 EPS estimate is ($1.60) 49 HYPERLINK l _TOC_250004 Valuation We use an 8x P/E to value M 51 HYPERLINK l _TOC_250003 ROST (Neutral) 54Estimate Changes Our new FY20 EPS estimate is $1.85 55 HYPERLINK l _TOC_250002 Valuation We use a 19x P/E to value ROST 57 HYPERLINK l _TOC_250001 TJX (Neutra

19、l) 60Estimate Changes Our new FY20 EPS estimate is $0.65 61 HYPERLINK l _TOC_250000 Valuation We use a 19x P/E to value TJX 63Jay Sole Analyst HYPERLINK mailto:jay.sole jay.sole+1-212-713 3559Mauricio Serna, CFAAnalyst HYPERLINK mailto:mauricio.serna mauricio.serna+1-212-713 9028Megan Foo Associate

20、Analyst HYPERLINK mailto:megan.foo megan.foo+1-212-713 3013Price Target and EPS Changes in PicturesWe have lowered our PTs for retailers by an average of 44%Figure 2: How our Price Targets have changed: We take a P/E multiple within a stocks normal 5-year historical range and apply it to our FY21 EP

21、S forecast.AEONew Price Target$10New target P/E10 xNew FY21EPS est.$1.00Old Price Target$20Old target P/E12xOld FY21EPS est.$1.70PT %change-50%5-yr. FY1P/E low7x5-yr. FY1P/E high19xBURL$18026x$6.90$24025x$9.75-25%18x39xFL$287x$4.25$38.57x$5.25-27%4x18xGPS$86x$1.35$1810 x$1.75-56%5x18xJWN$1410 x$1.40

22、$3010 x$3.20-53%6x21xKSS$1810 x$1.80$4811x$4.50-63%4x17xLB$1413x$1.10$2514x$1.80-44%5x26xM$68x$0.75$157x$2.15-59%3x15xROST$8619x$4.50$12423x$5.44-31%14x27xTJX$4819x$2.50$6823x$3.02-29%14x26xSource: UBS Research estimates, Factset.Lowering FY20 and FY21 EPS estimates by an average of 81% and 37%, res

23、pectivelyFigure 3: How our EPS estimates have changedFY20 EPS estimateNewOld% Chg.FY21 EPS estimateNewOld% Chg.AEO$0.15$1.55-90%$1.00$1.70-41%BURL$0.85$8.40-90%$6.90$9.75-29%FL$0.60$4.85-88%$4.25$5.25-19%GPS($0.60)$1.84NM$1.35$1.75-23%JWN($2.20)$3.10NM$1.40$3.20-56%KSS($0.90)$4.40NM$1.80$4.50-60%LB(

24、$0.35)$1.67NM$1.10$1.80-39%M($1.60)$2.32NM$0.75$2.15-65%ROST$1.85$4.94-62%$4.50$5.44-17%TJX$0.65$2.74-76%$2.50$3.02-17%Source: UBS Research estimates. NM (Not meaningful) for FY20 EPS revisions where new estimate is negative.We remain more cautious than the Street as our EPS FY20 and FY21 forecasts

25、in average lie 69% and 23% below consensus, respectivelyFigure 4: UBS FY20 and FY21 EPS estimates vs. consensusFY20 EPS estimatesUBSConsensus% Diff.FY21 EPS estimatesUBSConsensus% Diff.AEO$0.15$0.60-75%$1.00$1.11-10%BURL$0.85$4.17-80%$6.90$7.73-11%FL$0.60$3.27-82%$4.25$4.29-1%GPS($0.60)$0.40NM$1.35$

26、1.40-4%JWN($2.20)$1.11NM$1.40$2.77-49%KSS($0.90)$0.83NM$1.80$3.25-45%LB($0.35)$0.92NM$1.10$1.86-41%M($1.60)$0.38NM$0.75$1.70-56%ROST$1.85$3.26-43%$4.50$4.62-3%TJX$0.65$1.78-63%$2.50$2.67-6%Source: UBS Research estimates, Factset. NM (Not meaningful) for FY20 EPS revisions where new estimate is negat

27、ive.AEO (Buy)American Eagle Outfitters IncBuy (price target US$10.00)UBS Research THESIS MAP a guide to our thinking and whats where in this reportPIVOTAL QUESTIONSQ: Can Aerie become a $1B brand?Yes. We think it can actually become a $2B brand. By leading the body positivity movement, Aerie has sto

28、len consumer mindshare from Victorias Secret and positioned itself for major share gains. Aerie has only 150 stand-alone stores today and we think can add another 200. Plus, new stores likely drive significant eCom growth. Solid comps plus an almost tripling footprint drives our $2B LT forecast.Q: C

29、an AEO drive sales in the midst of COVID-19?After COVID-19, we think the answer is yes. UBS Evidence Lab global fashion surveys indicate the American Eagle brand is strong. Plus, we think American Eagles operational improvements position it well to adapt to the changing US retail environment. We mod

30、el 2% 5-year sales CAGR and believe AE can hold its share.Q: When can AEO margins recover?We expect for AEO to regain some operating leverage and gross margins in FY21. We see AEOs long- term EBIT margins trending in the 6%-7% range. In FY20, we assume extended store closures caused by COVID-19 lead

31、 to gross margin eroding markdowns and SG&A deleverage.UBS VIEWCOVID-19 should significantly impact AEOs FY20 earnings. However, we see Aerie as Softlines most underappreciated growth brand. We think it can become a $2B brand from $0.7B today and drive a 4% 5-yr. EPS CAGR for overall AEO. Thus, we e

32、xpect for AEO shares to re-rate to 10 x P/E from its current 8x multiple and see 2:1 upside/ downside skew.EVIDENCEUBS Evidence Lab Spend Tracker data shows American Eagle, as a company, is directly taking share from Victorias Secret. Geospatial analyses suggest Aerie has room to add stores and UBS

33、Evidence Lab Glassdoor studies reveal high AEO employee morale. AEO ranks in the top quintile of 58 peers.WHATS PRICED IN?Our reverse DCF analysis suggests the market prices in FY20 earnings significantly down and remaining depressed for many years.UPSIDE / DOWNSIDE SPECTRUMAEO.N Price28Apr35.030.02

34、5.0US$8.12EPS (UBS) 2022eP/E (UBS)ImpliedUpside to Downside2.1 to 120.015.021.00 =1.40 x15.0 xUpside:+159%10.010.00 =1.00 x10.0 xPrice Target: +23%5.00.02018201920202.00 =+12 mo.0.60 x3.3xDownside:-75%Value driversRevenue Gross SG&AOp. MarginAnnual 5Y avg.GrowthMargin% Sales2024Share Ct. E$21 upside

35、4.2%+25 bps-6 bps8.9%-4.5%13.2%$10 target2.0%-13 bps-7 bps6.6%-4.1%4.0%$2 downside-1.9%-38 bps-16 bps4.9%0.0%-9.6%Source: UBSPS GrowthCOMPANY DESCRIPTION HYPERLINK l _bookmark1 moreAmerican Eagle Outfitters is a specialty retailer that engages in the design, marketing, and sale of casual clothing. T

36、he company operates under the brands American Eagle. HYPERLINK l _bookmark1 more Estimate Changes Our new FY20 EPS estimate is$0.15Figure 5: How our AEO estimates have changedAEOModel Changes2020OldNew2021OldNew2022OldNew2023OldNewNet Sales4,4583,4954,6884,0224,9244,2975,1484,536y/y change4.6%-18.9%

37、5.2%15.1%5.0%6.8%4.6%5.6%AE Brand1.3%-23.8%1.0%21.2%1.0%2.0%1.0%1.0%Aerie20.0%3.8%18.0%30.0%15.0%17.0%13.0%15.0%Total Comp (UBS est.)4.3%-19.4%4.7%22.6%4.5%6.3%4.0%5.0%Gross Profit1,5661,0781,6521,3741,7351,4811,8141,568Gros s Margin35.1%30.8%35.2%34.2%35.2%34.5%35.2%34.6%y/y bps change-57 bps-449 b

38、ps10 bps332 bps0 bps30 bps0 bps10 bpsSelling, General and Administrative Expenses1,0588421,1139531,1681,0151,2211,069% of Revenues23.7%24.1%23.7%23.7%23.7%23.6%23.7%23.6%y/y bps change-49 bps20 bps-0 bps-41 bps-1 bps-6 bps0 bps-7 bpsOperating Income32253344235362266378293Operating Margin7.2%1.5%7.3%

39、5.8%7.3%6.2%7.3%6.5%y/y bps change-11 bps-576 bps10 bps431 bps1 bps36 bps-0 bps27 bpsOther Income (Expense), Net810868285Effective tax rate22.8%20.9%23.3%21.0%23.3%21.0%23.3%21.0%Adjusted Net Income25525270168284195296219Adjusted Diluted EPS1.550.151.701.001.851.252.001.50% change new vs. old-90.3%-

40、41.3%-32.5%-25.2%y/y change5.4%-89.9%9.4%561.6%9.0%25.3%8.2%19.9%Diluted Shares165168159168153156148146Source: UBS Research estimatesWe expect for AEO FY20 sales to decline 19% to US$3.5B. Our key forecast assumptions include:Q2 sales: AEO sales fall 62% in the 1st half of its second quarter. We ass

41、ume stores in the US reopen sometime during May, but traffic returns only very slowly. Aerie generates roughly 50% of its sales online and has been delivering above 20% comps over the last 5 years. We think its strong online sales should partially offset the decline from AE and store closures.2H20:

42、We assume business gradually gets back to normal by 4Q20. However, the effects of a potential recession, FX, and a likely heavy promotional environment take its toll on the business. Sales sequentially improve and only drop 9%in Q3 (vs. -45% in Q3), while total revenues return to positive in Q4.Figu

43、re 6: AEO revenue estimates1H1Q20e2H1Q20e1Q20e1H2Q20e2H2Q20e2Q20e3Q20e4Q20eFY20eAEO Total4531075612003705719681,3953,495y/y grow th2%-76%-37%-62%-29%-45%-9%6%-19%Source: Company data, UBS Research estimatesWe anticipate COGS deleveraging on rent and occupancy costs. AEOs mid- quarter commentary sugg

44、ests the company intends to cut on costs and expenses to protect margins. Within COGS, we see potential for savings in Rent and Occupancy costs as AEO may defer or abate payments during the store closure period. However, we think there will be some cost deleveraging as these fall 16% vs. revenues do

45、wn 19%. Also, gross margins should experience a significant contraction throughout the year as dampened demand creates an inventory overhang, leading to high markdowns.Figure 7: UBS Rent and Occupancy estimates for AEO (within COGS)Rent1Q20e822Q20e823Q20e1254Q20e125FY20e414% YoY-16%Other occupancy41

46、416262207-16%Total123123187187620-16%y/y grow th-33%-33%2%2%-16%Source: Company data, UBS Research estimates.We forecast AEO FY20 SG&A falling 15% to $1.0B. On the SG&A front, we expect reductions from compensation for key executive positions, travel, services and to some extent, advertising. We thi

47、nk the company will likely continue investing in the latter in order to keep the brand relevant and connected to consumers. This way, once business returns to normal, the company can leverage from this engagement. Nonetheless, we expect some degree of FY20 SG&A deleveraging as a result of faster rev

48、enue drop from the COVID-19 outbreak. Here are our key SG&A forecast assumptions:We consider 4 buckets of SG&A expense: These are Store Labor, Advertising, D&A and Corporate expense. Of these 4, 2 are amounts disclosed by AEO on an annual basis (Advertising and D&A). We make assumptions for the othe

49、r categories and also quarterly expenses. We model some expenses with a seasonal component (i.e. advertising), while others are similar quarter-to- quarter (i.e. corporate expenses).Fixed costs: We assume very little of AEOs costs are truly fixed. D&A is essentially fixed (assuming no restructuring)

50、, but these costs are only a small percentage of sales.We assume the biggest areas of opportunity are corporate expense and store labor: We see the most relevant sources of savings from cuts in Store Labor and Corporate Expenses of $85M and $95M, respectively. These reflect the effect of store closu

51、res and cuts to salaries.Figure 8: -UBS SG&A estimates for AEOSG&A estimates1Q20e2Q20e3Q20e4Q20eFY20e% YoYStore Labor7887118150432-16%Advertising11154371141-7%D&A444846461852%Corporate expense87574974267-26%Total SG&A2202082563411,025-15%y/y grow th-20%-30%-16%3%-15%Source: Company data, UBS Researc

52、h estimatesValuation We use a 10 x P/E to value AEOAEO FY1 P/E+1 Std DevAverage-1 Std DevFigure 9: Why 10 x? This P/E is below AEOs 5-yr. average P/E. We think by CY21, the COVID-19 situation will have normalized, but we see earnings risk across the industry. Hence, we use a lower multiple than the

53、historical average.20 x 18x 16x 14x 12x 10 x 8x 6x 4x 2x 0 xSource: FactSet, UBS ResearchFigure 10: AEOs P/E has been below the peers average. We think this continues even after the COVID-19 situation ends.5Y FY1 P/E History30 x20 x25x20 x11x15x10 x5xAEOMin/Avg/Max CurrentIndustry Avg.May-15 Aug-15

54、Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Aug-18 Nov-18 Feb-19 May-19 Aug-19 Nov-19Feb-20Source: FactSet, UBS ResearchFigure 11: Our target P/E for AEO implies it would be trading at 6x EV/EBITDA, within the companys 5-year range. We note that because of the new le

55、ase accounting rule, EV has increased and thus the multiple.5Y FY1 EV/EBITDA History12xMin/Avg/Max Current8x14x 12x10 x8x6x4x 2x0 xAEOIndustry Avg.Source: FactSet, UBS Research.Valuation OutputPV of FCF1,723PV of Terminal Value1,129Enterprise Value2,852Cash1,390Debt730Equity Value3,512Shares Outstan

56、ding168Value/Share (T+12)$21.00Implied Terminal EV/FCF Implied Terminal EV/EBITDAImplied Terminal ROIC11.2x5.0 x-35.0%LT grow th vs. WACC - Equity Value-1.5%-1.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%10.1%3,1523,1933,2373,2873,3413,4013,4693,5453,6309.8%3,2183,2623,3113,3653,4243,4903,5643,6483,7439.5%3,2883

57、,3363,3893,4473,5123,5853,6673,7593,8659.2%3,3623,4143,4723,5363,6073,6873,7773,8803,9988.9%3,4413,4973,5603,6303,7083,7963,8964,0114,143LT grow th vs. WACC - Equity Value / Share-1.5%-1.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%10.1%19.0019.0019.0020.0020.0020.0021.0021.0022.009.8%19.0019.0020.0020.0020.0021.

58、0021.0022.0022.009.5%20.0020.0020.0020.00$21.0021.0022.0022.0023.009.2%20.0020.0021.0021.0021.0022.0022.0023.0024.008.9%20.0021.0021.0022.0022.0023.0023.0024.0025.00AssumptionsValue as ofApr-21Mid-Year ConventionONCost of Equity9.5%Cost of Debt5.0%Tax Rate24.0%Debt to Capital0.0%WACC9.5%Terminal Gro

59、w th Rate0.5%Cost of EquityEquity Risk Premium5.5%Risk-Free Rate1.0%Beta1.5Required Return9.5%Figure 12: Our DCF analysis points to a $21 PT, but this is a secondary method of valuation. We note though this DCF shows the upside potential for the stock if COVID-19 ends sooner rather than later and AE

60、O is able to rebound quickly.Discounted Cash Flow Valuation ($M)2020E2021E2022E2023E2024E2025E2026E2027E2028E2029E2030E2031ERevenues3,4954,0224,2974,5364,7624,9525,1265,3055,4645,6015,7135,799GAAP EBIT53235266293314312318323328330331330Income Tax114956626675767879797979NOPAT4218621023224823724124624