As Black Friday and the all important holiday shopping season kicks off, The Walking Company Holdings (PINK: WALK), The Gap (NYSE: GPS), Michael Kors Holdings (NYSE: KORS) and Stage Stores (NYSE: SSI) have been this year’s best performing retail apparel stocks. That’s an enviable position to be in as Black Friday and the holiday season is really the make or break time of the year for retail stocks as it can account for 40% of annual sales. However, predictions about this year’s holiday shopping season are rather mixed as market research company ShopperTrak is predicting an overall year-over-year holiday shopping season increase of 3% (less than the 3.7% year-over-year overall sales increase achieved in 2011) while the Deloitte consulting group is predicting a 3.5% to 4% increase. With that in mind, do retail apparel stocks Walking Company Holdings, The Gap, Michael Kors Holdings and Stage Stores still offer any bargains for investors?
The Walking Company Holdings (PINK: WALK) Was in Chapter 11
The Walking Company Holdings has over 200 stores nationwide and is a specialty retailer of authentic comfort footwear and accessories. The Walking Company Holdings is up 156.9% since the start of the year and up 516.7% since early 2009 but investors should note that it in December 2009, the company filed for voluntary Chapter 11 Bankruptcy Protection and emerged from Chapter 11 in April 2010. I am also not seeing any financials for the past few years from The Walking Company Holdings – so its investor beware. On Monday, The Walking Company Holdings closed at $9.25 (WALK has a 52 week trading range of $3.50 to $9.28 a share) for a market cap of $88.25 million.
The Gap (NYSE: GPS) Looks Like it Has Turned Itself Around
The Gap is a global specialty retailer offering clothing, accessories and personal care products for men, women, children and babies through about 3,000 company-operated stores and over 250 franchise stores. The Gap is up 85.61% since the start of the year and up 71.4% over the past five years plus the stock has a trailing P/E of 16.83 and a forward P/E of 13.56. Last week, The Gap reported a 60% jump in earnings – more evidence that the company has turned itself around after replacing key executives and reorganizing itself. In fact, The Gap now relies less on markdowns as it has managed to broaden its appeal. The Gap also raised its profit outlook for the year – meaning it has momentum going into the holiday season but anything less than a strong performance could impact the stocks when the final numbers come in. On Monday, The Gap rose 2.5% to $24.43 (GPS has a 52 week trading range of $17.62 to $37.85 a share) for a market cap of $16.56 billion.
Michael Kors Holdings (NYSE: KORS): Like Its Products, the Stock is Not Exactly a Bargain
Michael Kors Holdings is an award-winning designer of luxury accessories and ready to wear whose stores are operated (either directly or through licensing partners) in some of the most prestigious cities in the world, including New York, Beverly Hills, Chicago, London, Milan, Paris, Munich, Istanbul, Dubai,Seoul, Tokyo and Hong Kong. Michael Kors Holdings is up 85.7% since the start of the year and it went public back in December at $20 a share to close the day at $24.20. In addition, Michael Kors Holdings has recently reported a 74.4% sales increase to $532.9 million while EPS more than doubled to 49 cents per share but the company also gave a slightly weaker than expected guidance for the current quarter. Otherwise, investors should note that Michael Kors Holdings does have a trailing P/E of 40.23 and a forward P/E of 25.43 – meaning like its products, the stock is not exactly a bargain. On Monday, Michael Kors Holdings rose 0.58% to $50.61 (KORS has a 52 week trading range of $23.51 to $58.62 a share) for a market cap of $9.75 billion.
Stage Stores (NYSE: SSI) Could Still Be Available on Discount
Stage Stores brings moderately priced, nationally recognized brand name and private label apparel, accessories, cosmetics and footwear for the entire family to small and mid-size towns and communities across 40 states through over 800 stores operating under the “Bealls,” “Goody’s,” “Palais Royal,” “Peebles” and “Stage” trade names. Stage Stores is up 75.7% since the start of the year and up 45.1% over the past five years plus the stock has a trialing P/E of 21.98 and a forward P/E of 16.49 – meaning its not particularly overvalued. Stage Stores recently reported an 11% revenue increase to $370.6 million and cited strength across all regions and all merchandise categories but the company still loss $8.9 million verses $11.3 million for the same period last year. Nevertheless, Stage Stores lifted its guidance for the rest of the year and said it would be opening its stores on Thanksgiving to compete with other big retailers who plan to do the same. On Monday, Stage Stores rose 3.8% to $24.4 (SSI has a 52 week trading range of $11.21 to $27.42 a share) for a market cap of $767.63 million.
The Bottom Line. Investors might want to past over retail apparel The Walking Company Holdings and Michael Kors Holdings and instead at least consider going shopping at the The Gap and Stage Stores.