Overview
BMO Capital Markets announced the initiation of coverage for the softlines retail, apparel and footwear sector, adopting a cautious stance for fiscal 2027 due to a weakening consumer environment, persistent inflation and rising input costs. Analyst Kelly Crago noted that while shoppers continued to visit stores during peak periods, the post‑peak lull has been weaker and consumers are increasingly value‑seeking as the year progresses into the fall.
Athletic Segment Outlook
The firm expressed the most negative outlook for the athletic segment, stating that the market has not fully priced in the adverse impact on brands when the cycle turns against them. Consequently, BMO assigned Underperform ratings to four athletic‑exposed stocks: Nike Inc. with a target price of $30, Deckers Outdoor Corp. at $70, Dick’s Sporting Goods Inc. at $110 and Lululemon Athletica Inc. at $70, and modeled earnings for each well below consensus estimates.
Constructive Ratings on Select Softlines
Conversely, BMO was constructive on softlines companies it considered to have self‑help narratives. It initiated Outperform ratings on Abercrombie & Fitch Co., Amer Sports Corp., Carter’s Inc. and Steve Madden Ltd., citing ongoing brand turnarounds and growth drivers. The broker also placed a Market Perform rating on a broader set of names, including American Eagle Outfitters Inc., Gap Inc., Ulta Beauty Inc., Urban Outfitters Inc., Victoria’s Secret & Co., Birkenstock GmbH, Bath & Body Works Inc., On Holding AG and Academy Sports + Outdoors Inc.
Overall, BMO’s coverage emphasizes caution for the sector amid macro headwinds while highlighting selective opportunities in brands with clear turnaround stories.