Retail Sector Overview - The retail sector has demonstrated significant resilience despite rising prices and inflation, with retail sales increasing by 0.5% in July after a 0.9% rise in June, and a year-over-year increase of 3.9% [1][3] - The growth in July was primarily driven by a 1.6% increase in motor vehicle sales at auto dealerships, following a 1.4% rise in the previous month [3] Online and Specific Retail Sales - Online sales rose by 0.8% in July, building on a 0.9% increase in June, while clothing stores and furniture outlets saw sales increases of 0.7% and 1.4%, respectively [4] - Households are reportedly spending less and saving more due to concerns over a weak labor market and potential inflation from tariffs [4] Impact of Tariffs and Federal Reserve Policy - Tariffs imposed by the Trump administration have contributed to rising prices, which in turn have influenced retail sales positively, potentially leading the Federal Reserve to maintain interest rates at 4.25-4.5% for an extended period [5] - Despite a hawkish stance, some Federal Reserve officials have indicated plans for two 25-basis-point rate cuts before year-end, with markets pricing in an 83.1% chance of a cut in September, which would benefit the retail sector and the economy overall [6] Selected Retail Stocks - Four retail stocks are highlighted for investment: Levi Strauss & Co. (LEVI), Walmart, Inc. (WMT), Dutch Bros Inc. (BROS), and Wayfair Inc. (W), all of which have seen positive earnings estimate revisions in the past 60 days and carry favorable Zacks Ranks [2][10] Levi Strauss & Co. - Levi Strauss & Co. has an expected earnings growth rate of 4% for the current year, with a Zacks Consensus Estimate improvement of 5.7% over the past 60 days, and holds a Zacks Rank 1 [8] Walmart - Walmart's expected earnings growth rate for the current year is also 4%, with a 0.4% improvement in the Zacks Consensus Estimate over the past 60 days, and it holds a Zacks Rank 2 [11] Dutch Bros Inc. - Dutch Bros Inc. is projected to have a 34.7% earnings growth rate next year, with an 8.2% improvement in the current-year earnings estimate over the past 60 days, and carries a Zacks Rank 2 [12] Wayfair Inc. - Wayfair Inc. is expected to see earnings growth of over 100% for the current year, with the Zacks Consensus Estimate improving by more than 100% in the past 60 days, and holds a Zacks Rank 2 [14]

Investment Rating - The report maintains a "Buy" rating for Hysan Development (14 HK), Link REIT (823 HK), and Wharf REIC (1997 HK) [5][32][32] Core Insights - Hong Kong's retail sales grew by 2.4% year-on-year in May 2025, marking the end of a 14-month decline, with expectations for a full-year decline of only 3% in 2025 [2][8] - The positive wealth effect from financial markets and an increase in visitor arrivals, which rose by 12% year-on-year to approximately 24 million in the first half of 2025, are expected to support domestic spending [2][4] - Retailers focusing on discretionary spending, such as CTF Jewellery and Sa Sa International, have shown improved sales, while mall operators like Link REIT are expected to face ongoing rental pressures despite some tenant sales resilience [3][4] Summary by Sections Retail Market Overview - Retail sales in Hong Kong turned positive in May 2025 after a prolonged decline, with a 2.4% year-on-year increase, reversing a 2.3% decline in April [2][8] - The retail market is anticipated to stabilize, with a projected narrowing of the sales decline in the second half of 2025 [2][8] Retail Performance by Category - The largest increase in retail spending was seen in Cosmetics, which rose by 8.7% year-on-year, followed by Other categories at 7.6% and Department Store Sales at 6.3% [9][13] - Certain categories, including Jewellery and Fuels, experienced declines, with Jewellery down 3.2% year-on-year [9][13] Company-Specific Insights - Hysan Development's mall portfolio is expected to benefit from the positive wealth effect, with a target price of HKD 18.60, implying a 28.3% upside from the current price [5][32] - Link REIT is projected to maintain a resilient distribution per unit (DPU) supported by lower borrowing costs and its diversified portfolio, with a target price of HKD 45.00, indicating a 6.6% upside [5][32] - Wharf REIC is also rated as a "Buy," with a target price of HKD 30.00, reflecting a 33.0% upside, driven by expected growth in tourist spending [5][32]

Core Insights - Urban Outfitters, Inc. (URBN) reported strong first-quarter fiscal 2026 results, with both earnings and sales exceeding expectations, leading to a 17.5% increase in share price during after-market trading [1][5]. Financial Performance - Earnings per share reached $1.16, surpassing the Zacks Consensus Estimate of 81 cents, marking a 78.5% increase year-over-year [5]. - Total net sales increased by 10.7% year-over-year to $1,329.5 million, exceeding the consensus estimate of $1,286 million [5]. - The Retail segment's comparable sales grew by 4.8%, with notable increases in sales from both digital and physical stores [6]. Segment Performance - The Wholesale segment saw a significant 24.2% year-over-year growth in net sales, driven by a 25.6% increase in Free People's wholesale sales [7]. - Nuuly, the women's apparel subscription rental service, experienced a 59.5% increase in net sales, attributed to a 52.9% rise in average active subscribers [7]. Margin and Cost Insights - Gross profit rose by 19.8% year-over-year to $489.1 million, with gross margin expanding by 278 basis points to 36.8% [8][9]. - Selling, general and administrative (SG&A) expenses increased by 8.1% year-over-year to $360.8 million, primarily due to higher marketing costs and store payroll expenses [10]. Operational Highlights - Operating income increased by 71.8% to $128.2 million, with the operating margin rising by 340 basis points to 9.6% [11]. - The company opened 13 retail locations during the quarter, including two Urban Outfitters and two Anthropologie stores [12]. Financial Health - As of April 30, 2025, URBN had cash and cash equivalents of $189.4 million and total shareholders' equity of $2.43 billion [14]. - The total inventory grew by 14.6% year-over-year, with the Retail segment's inventory increasing by 13.2% [14]. Future Outlook - For the fiscal second quarter, Urban Outfitters anticipates total company sales growth in the high-single-digit range, with the Retail segment expected to see mid-single-digit growth [18]. - The company plans to open 64 stores and close 17 in fiscal 2026, with a capital expenditure of $240 million [21].