While it might be tempting to think that our view is now consensus – guess again. These headwinds are going to strengthen before they subside. This is not a fast moving storm front, and the Street still does not get it.
Current estimates across every publicly-traded apparel retailer and brand suggest that the worst is already over. Consensus is looking for a 31bp decline in margins this year, and for nearly all of that to be recaptured in FY09. It looks like most analysts are keeping on the rose-colored glasses and drinking managements’ Kool-Aid.
Stay tuned for further developments on the earnings front, but expect downward revisions as analysts ditch the glasses, dump the Kool-Aid and start to see the light. Until then, be very cautious about which EPS estimates you believe.
Global Softlines Team
RESEARCH EDGE, LLC