Stifel downgrades Allbirds, Wolverine, PLBY in downbeat retail review
Spencer Platt

Stifel analyst Jim Duffy cited numerous retail and lifestyle brands as areas due for drawdowns, with downgrades of specific names leading his reassessment.

The analyst reduced estimates across numerous prominent names in the retail sector operating within footwear, sporting goods, lifestyle, apparel, and specialty retail verticals. 

âHigh inventories, lower traffic, and early promotions lead us to cut estimates for nearly all companies in our coverage,â Duffy explained. âOur revised base case assumes a soft landing for the U.S. (no recession) but that inventory imbalances and promotion pressures margin and revenue.â 

Under these conditions, Duffy expects that current consensus estimates are âtoo ambitiousâ with historical precedent suggesting multiple revisions of expectations are necessary before the sector bottoms. In total, 20 different stocks across the retail and lifestyle space saw price targetâs trimmed. Notable price target cuts included a reduction in Lululemonâs (LULU) price target from $500 to $381, Columbia Sportswear (COLM) from $100 to $81, and Skechers (SKX) from $61 to $45.

In addition to price target cuts, Allbirds (NASDAQ:BIRD) -2.43%, Wolverine World Wide (NYSE:WWW) -0.13%, and PLBY Group (NASDAQ:PLBY) -0.58% were each downgraded from âBuyâ to âHoldâ. In each case, the downgrade reflected a turn to an âunfavorable risk/rewardâ dynamic and show diminished upside in the current environment than was previously anticipated.

âThe better brands/models can outperform on a relative basis for a time but, in a storm, there is no safe port and the Buy signal is not until there is a break in the clouds and hope for the weather to clear,â Duffy wrote, summing up his more cautious turn.
To be sure, there were some outperformers that prompted price target increases despite the broadly bearish outlook. Decker Outdoors (DECK), Dickâs Sporting Goods (DKS), and VF Corporation (VFC) made up the âBuyâ rated stocks with paradoxically raised price targets.
Read more on B. Riley Securitiesâ bullish bet on footwear stocks.