Steer Clear Of These 4 Apparel Stocks For Now
Zacks Investment Research | Jun 20, 2016 11:15PM ET
The textile apparel sector has had a rough ride so far this year. In the first quarter of fiscal 2016, the sector reported dismal results with a variety of apparel companies reporting below-par results, in spite of conservative estimates.
The textile industry also posted a decline in comps in the quarter, grappling with issues like competition and declining footfall. Here, change is the only constant and the players are under perennial pressure to hit the right chord with the fashion conscious.
Meanwhile, an increasing number of customers are resorting to online buying and this has dealt a major blow to apparel retailers who are dependant on mall traffic. Moreover, consumer preferences have shifted from clothes toward technology and home improvement. Further, unusually warm weather conditions and the strengthening of the U.S. dollar have added to their woes.
Thus, before entering another earnings season, it’s time to fine tune your portfolio by disposing stocks that may hurt your returns.
Here we have zeroed in on four textile apparel stocks that are witnessing downward estimate revisions and carry a Zacks Rank #4 (Sell) or 5 (Strong Sell). Declining estimates clearly indicate that analysts are skeptical about the performance of these stocks going ahead.
4 Apparel Stocks to Avoid
Guess’ Inc. (NYSE:GES) , a manufacturer of casual apparel, accessories and related consumer products, reported a loss wider than the Zacks Consensus Estimate and revenues below the mark in first-quarter fiscal 2017. For fiscal 2017, Guess lowered its earnings outlook and now expects adjusted earnings in the range of 55 cents to 75 cents compared with 65 cents to 85 cents expected previously. The lowered guidance reflects a challenging environment for the company and its soft start to fiscal 2017.
This Zacks Rank #4 company has underperformed the Zacks Consensus Estimate in two of the trailing four quarters. Following the dismal performance, the Zacks Consensus Estimate of 77 cents dropped to 59 cents for fiscal 2016 over the past 30 days.
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