URBN - Gap Kohl's among stocks cut by Citi in broad retail sector downgrades

After a crash for the retail stocks over the past week, Citi is signaling yet more caution on the space. Shares of numerous retailers reached 52-week lows towards the close of May as margin compression and supply chain issues at retail giants Walmart (WMT) and Target’s (TGT) prompted pessimism on the industry overall. Given adverse trends reflected in earnings reports from firms that typically outperform, Citi indicated there is room to move estimates downward on Monday. “On the demand side, lack of stimulus and the burden of higher food and fuel prices are squeezing lower income consumers, leading to a pullback in discretionary categories,” Citi analyst Paul Lejuez explained. “On the cost side, companies are facing higher-than-expected pressure following escalation of fuel/supply chain costs resulting from the war in Ukraine.” While price increases could curtail the impact on margins, Lejuez indicated this action will be increasingly difficult for retailers to

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Gap, Kohl’s among stocks cut by Citi in broad retail sector downgrades