Retail stocks ahead of Wells Fargo & Company warn of volatility or sustained. Preferred Bath & Body Works (BBWI.US), Tapestry (TPR.US)

As the financial reporting season continues, many retail companies will successively release their latest financial reports. At the same time, the so-called "terrifying data" of U.S. January retail sales will be announced this Friday. Investors hope to find clues about consumer spending from retail stocks' financial reports and retail sales data, and further assess the U.S. economic situation. Before the intensive release of retail stocks' financial reports, Wells Fargo & Company released a research report at the beginning of February, stating that the entire retail industry will continue to fluctuate, and adjusted the ratings of multiple retail stocks covered. The bank stated that after the Christmas holiday, foot traffic in the first two weeks of January increased by 5% year-on-year, even though the year-on-year base was lower. Due to extreme cold weather, foot traffic in the third week of January decreased by 3%. Looking ahead, the bank stated that cold weather in February and tariff uncertainty may further contribute to industry volatility. Wells Fargo & Company stated that despite the uncertain macroeconomic environment, they are optimistic about a few companies in the retail industry with special opportunities, including Bath & Body Works(BBWI.US), Tapestry(TPR.US), Burlington Stores, Inc.(BURL.US), Capri Holdings(CPRI.US) and TheRealReal(REAL.US). Wells Fargo & Company stated that due to the business turning point becoming evident, they raised their profit forecast for Bath & Body Works, expecting the company's earnings per share for the 2025 fiscal year to be $3.55. The bank believes that a demand rebound will lead to Bath & Body Works' recovery, and the acceleration of its innovative product line will drive revenue normalization. The bank reiterated a "buy" rating for Bath & Body Works with a target price of $48. For Tapestry, Wells Fargo & Company believes that the market still underestimates the growth potential of the company's Coach brand, and based on Coach's continued growth momentum and the company's accelerated stock repurchase program, they raised their forecast for Tapestry's earnings per share for the 2026 fiscal year to $5.20, higher than the market consensus. The bank gave Tapestry a "buy" rating with a target price of $90. In the research report, Wells Fargo & Company also stated that Burlington Stores, Inc. is the best target for discount retail, Capri Holdings will benefit from margin improvement and the potential realization of the Versace brand, and TheRealReal's profit turning point has already become evident. Furthermore, Wells Fargo & Company also lowered their expectations for PVH(PVH.US). The bank stated that although the stock's valuation is close to historical lows, its accumulating risks cannot be ignored, and it may fall into a sustained value trap. The bank pointed out that the main risks facing PVH include: declining brand popularity affecting direct sales, rising inventory risks, and pressures from the Eurozone and foreign exchange. Therefore, Wells Fargo & Company lowered their earnings per share forecast for PVH for the 2025 fiscal year to $11.85, below the market consensus of $12.27. The bank also downgraded their stock rating for PVH to "hold" and lowered their target price from $130 to $105.