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After A Strong Q2 In Retail, Can Investors Find The Matching Trade In Apparel Stocks?

After A Strong Q2 In Retail, Can Investors Find The Matching Trade In Apparel Stocks? - Coach, Inc. NYSE:COH, Guess?, Inc. NYSE:GES

Earnings season has certainly been a lot kinder this time around for the retail and fashion sector.

Macy's Inc M 2.13% reported a top- and bottom-line beat in its earnings, but perhaps more importantly, the company announced it will close 100 stores. The decision to shutter stores was well received among some Wall Street analysts, such as Citi's Paul Lejuez, who praised management's steps to "adapt to the new retail environment."

Kohl's Corporation KSS 2.8% reported a strong second-quarter earnings print, as its earnings improved by 14 percent and sales came above Wall Street's estimates. However, analysts at Goldman Sachs reiterated a Sell rating on the company ,as they remain unconvinced that the sequential comp improvement seen in the quarter "does not signal a path to positive comps near-term."

Nordstrom, Inc. JWN 1.2%'s strong results may have confirmed the retail sector is on the rebound, at least for the high-end segment. The company earned $0.67 per share on revenue of $3.592 billion compared to analyst expectations of $0.56 per share and $3.68 billion. However, some among Wall Street were also not convinced that Nordstrom's successful quarter is an indication of long-term success.

Trickle-Down Effect

The strong earnings report from Macy's, Kohl's and Nordstrom had a positive trickle-down effect on apparel and luxury brands, including Coach Inc COH 1.39%, as the handbag and luxury good maker actually reported its first quarter of positive comps since 2013.

Ralph Lauren Corp RL 0.77%'s better-than-expected earnings print was driven by strong revenue and gross margins. The company also reaffirmed its full-year guidance, providing investors with a higher degree of confidence that a turn-around plan is working.

Who Is Left To Report?

As earnings season is winding down, few retailers remain on deck to report their earnings.

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