Certain retail stocks are set to gain on popularity among millennial or Generation Z consumers, a segment more apt to spend online as they grow their disposable incomes, according to a recent survey conducted by a team of analysts on the Street. (See also: Millennials Struck Out With Stock Picks in 2017.)
Cowen & Co. retail and consumer brands analyst John Kernan spoke on CNBC on Monday indicating that the younger generations have gravitated toward products from companies including Amazon.com Inc. (AMZN), Nike Inc. (NKE), PVH Corp. (PVH), Michael Kors Inc. (KORS), and Kohl's Corp. (KSS). While some results of the survey were more intuitive, such as "Amazon dominating consumption patterns among Gen Z and Millennials," the analyst noted significant findings such as Calvin Klein scoring two times higher than some of its key competitors in apparel.
The Cowen managing director lifted his price target on shares of Calvin Klein parent company PVH to $165, reflecting a 15% upside from Monday afternoon as the stock trades up 0.2% at $143.37. Shares of the New York City-based apparel company, which also owns brands such as Van Heusen and Tommy Hilfiger, have gained 57.3% over the most recent 12 months. Kernan applauded the company's execution of its marketing and digital engagement strategy around Gen Z and Millennials.
First-Party Relationships with Amazon
Another interesting find was that despite Kohl's stock's 5%-plus dip in the most recent five-day period, the department store ranked first in its category among younger consumers. The discount retailer has seen its stock grow 54.8% within a year.
Another key conclusion from the report, said the analyst, is that "brands are going to have to develop their first party relationships with Amazon more directly" as the retail behemoth becomes bigger, faster and more influential.
The survey comes as Stifel analysts issued a note suggesting that German footwear giant Adidas AG (ADDYY) is still a distant second to Nike, which it views as the clear king of sneakers. (See also: Bitcoin Will Get Millennials Trading: TD Exec.)