US Softlines Retail "UBS Evidence Lab inside: New Survey Reinforces Conv..."

Research evidence excerpt

US Softlines Retail "UBS Evidence Lab inside: New Survey Reinforces Conv..."

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US Softlines Retail Equities

AmericasUBS Evidence Lab inside: New Survey Reinforces

Conviction Off-Price Share Gains Will Continue Retailers, Specialty

Jay Sole

Analyst

jay.sole@ubs.com

Shoppers continue to favor Off-Price's value proposition: +1-212-713 3559

Our conversations with investors indicate the market is wondering if Off-Price stocks are Michael Lasser

still good investments at current valuations. We believe the answer is yes and rate TJX Analyst

and BURL Buy. UBS Evidence Lab's 9th US Off-Price and Department Store Retailers michael.lasser@ubs.com

consumer survey reinforces our view consumers continue to favor Off-Price's value +1-212-713 2440

proposition over Department Stores' offerings (link). We this this justifies owning stocks Mauricio Serna, CFA

like TJX (link) and BURL (link) . We rate Macy’s (link), Kohl’s (link) and Dillards (link) Sell. Analyst

mauricio.serna@ubs.com

The consumer backdrop: resilient but increasingly price sensitive: +1-212-713 9028

The survey highlights a constructive but value-oriented consumer. Consumers are still Natalie Koltermann

spending, but are highly reactive to price differences. This is a structurally favorable Associate Analyst

setup for Off-Price, in our view, whose model is built around visible price gaps vs. natalie.koltermann@ubs.com

traditional retail. Net apparel spending intentions remain positive (Figure 36Howconsumersexpecttheiraparel,fotwearandacesoriesbudgettochangeinthenext12months.). However, +1-212-713 4229

price sensitivity looks elevated: 59% of consumers would switch retailers for just a ~5% Aditya Kulkarni