Barclays Analyst Sees Broad Strength In Just-Ended Retail Season

Broad strength in the just-ended holiday shopping season got tempered by weakness in specialty apparel, while heavy promotions pressured retailers' margins, an analyst said Wednesday.

Gap Inc (NYSE: GPS) and L Brands Inc (NYSE: LB) are slated to post December sales on Thursday. A raft of other retailers are expected to offer a peek at holiday results within a matter of days.

Barclay's Matthew McClintock tweaked his estimates upward Wednesday for L Brands and Gap and cut his view of Abercrombie & Fitch Co. (NYSE: ANF).

McClintock said online sales appeared generally strong within the industry in the just-ended shopping season, but womens' and teen apparel stores saw spotty results.

Athletic and broadline womens' retailers did comparatively well, yet specialty purveyors may have fallen flat.

Sales promotion discounts started earlier than in previous years, resulting perhaps, in greater-than-expected margin pressure within the industry, McClintock said.

For L Brands, which operates Victoria's Secret and Bath & Body Works, McClintock boosted his estimate of December same-store sales to between 3 percent and 5 percent, from a previous range of 1 percent to 3 percent.

McClintock also increased his fourth-quarter earnings estimate for L Brands about 2.5 percent to $1.74, in line with the consensus.

L Brand's product assortment and favorable inventory position helped both sales and margins during the holiday period, McClintock said

For Gap, McClintock boosted his earnings estimate for the fourth quarter about 3 percent to $0.68 a share, and maintained his expectation that same-store sales for December grew between 1 percent and 3 percent.

Gap's flagship brand continued to face troubles, but full-price selling at its Old Navy stores could result in better-than-expected fourth-quarter margins, McClintock said.

Abercrombie got its fourth-quarter earnings estimate cut by 4 percent to $1.19 a share by McClintock, who said continued margin pressures there won't be offset in the near term by current restructuring.