CPRI - Lululemon and Under Armour make Barclays' list of margin recovery picks

Barclays says apparel companies took a step back with inventory in Q4 after sales were negatively impacted by COVID surges in the U.S. and shutdowns in Europe.Analyst Adrienne Yih: "We view this setback as extending what we believe will be at least a four-quarter run for merchandise margin expansion across the sector. We forecast that in 1Q21 nearly all of our coverage universe will have sales growth above inventory growth, generating a top quartile, or A+ grade, for the sector. That will kick off a four to six quarter run of merchandise margin expansion."Yih and team believe it is not too late to chase apparel stocks even after the recent run as the combination of merchandise margin expansion and sales leverage sets up for EPS upside throughout 2021.Late cycle companies in inventory control with upside seen on them include Capri Holdings ([[CPRI]] +0.5%), Canada Goose ([[GOOS]] +0.5%), Lululemon ([[LULU]] +1.3%),

For further details see:

Lululemon and Under Armour make Barclays' list of margin recovery picks