Equity Research Focusing on the Consumer Sector, Small Cap Consumer Research

Small Cap Consumer Research

Equity Research Focusing on the Consumer Sector

Small Cap Consumer Research, LLC is a leading company-sponsored equity research provider focusing on the consumer sector (apparel, brand licensing and specialty retailing segments).

Equity Bottom-Up

Vera Bradley, Inc. designs, produces and retails fashion accessories for women. The Company markets handbags, accessories and travel and leisure items through its chain of retail stores and independent retailers.

<ul><li>We are reiterating our Buy rating, $10 price target and projections for Vera Bradley after the company completed their New Day relaunch with changes to the outlet store channel yesterday.</li><li>With outlet locations representing approximately 65% of the company's stores, the channel is a crucial piece of the company's business model.</li><li>Unlike the complete makeover experienced by the company's main line stores, we view the shifts at the Vera Bradley outlets, which include new signage, launch of faux leather lines, a collection of Disney offerings specifically made for the outlet channel and lesser dependence on apparel, as more evolutionary and, frankly, able to drive stronger results for the outlet channel almost immediately.</li></ul>

We are reiterating our Buy rating, $10 price target and projections for Vera Bradley after the company completed their New Day relaunch with changes to the outlet store channel yesterday.With outlet locations representing approximately 65% of the company's stores, the channel is a crucial piece of the company's business model.Unlike the complete makeover experienced by the company's main line stores, we view the shifts at the Vera Bradley outlets, which include new signage, launch of faux leather lines, a collection of Disney offerings specifically made for the outlet channel and lesser dependence on apparel, as more evolutionary and, frankly, able to drive stronger results for the outlet channel almost immediately.

VRA: Snapping the Store: New Day for the Outlets, Reiterate Buy, $10 PT

Build-A-Bear Workshop, Inc. is an interactive, entertainment mall-based retailer that invites guests to create their own customized stuffed animals through a bear-making process.  The Company operates various locations in the United States and other countries.

<ul><li>We are reiterating our Buy rating and $41 price target and FY24 and FY25 EPS projections, but further back-end loading our FY24 quarterly projections, as we believe 2Q results, which will be announced next Thursday, will reflect slightly higher than expected discounting and tough comparisons in what is historically the least important quarter for the company.</li><li>That said, we believe the decision to roll out Halloween earlier than previously, the potential to leverage demand for multiple offerings, the expansion into Mini Beans, and continued high-margin franchise and commercial expansion, should drive strong 2H results.</li><li>Further, with management continuing to aggressively repurchase BBW shares, the stock registering an almost 3% dividend yield and a valuation (even with our Street-low projections), of 4.4X our FY25 EBITDA we believe, the longer term risk/reward for BBW remains highly impressive, and we reiterate our Buy rating and $41 price target</li></ul>

We are reiterating our Buy rating and $41 price target and FY24 and FY25 EPS projections, but further back-end loading our FY24 quarterly projections, as we believe 2Q results, which will be announced next Thursday, will reflect slightly higher than expected discounting and tough comparisons in what is historically the least important quarter for the company.That said, we believe the decision to roll out Halloween earlier than previously, the potential to leverage demand for multiple offerings, the expansion into Mini Beans, and continued high-margin franchise and commercial expansion, should drive strong 2H results.Further, with management continuing to aggressively repurchase BBW shares, the stock registering an almost 3% dividend yield and a valuation (even with our Street-low projections), of 4.4X our FY25 EBITDA we believe, the longer term risk/reward for BBW remains highly impressive, and we reiterate our Buy rating and $41 price target

BBW: 2Q Preview: Remaining Conservative; Reiterate Buy, PT

Guess?, Inc. designs, markets, distributes, and licenses a collection of casual apparel, accessories, and related consumer products.  The Company's apparel for men, women, and girls are marketed under branded names.  Guess? provides full collections of denim and cotton clothing and has granted licenses to manufacture complementary products.

<ul><li>We are reiterating our Buy rating, slightly below consensus projections, and $37 price target for Guess?</li><li>with the company announcing 2QFY25 (July) results after the close on Wednesday.</li><li>We believe 2Q, the first full quarter of results from rag & bone, continued positive shifts in wholesale and European operations and a further fashion focus in the domestic retail market, positions Guess?</li></ul>

We are reiterating our Buy rating, slightly below consensus projections, and $37 price target for Guess?with the company announcing 2QFY25 (July) results after the close on Wednesday.We believe 2Q, the first full quarter of results from rag & bone, continued positive shifts in wholesale and European operations and a further fashion focus in the domestic retail market, positions Guess?

GES: 2Q Preview: Setting Up for 2H Upside; Reiterate Buy, $37 PT

e.l.f. Beauty, Inc. operates as a cosmetic company. The Company offers beauty products for eyes, lips, and face. e.l.f. Beauty provides eyeliners, lipsticks, lip care and brushes, powder, and skin care products.

<ul><li>We are reiterating our Buy rating and $0.25 price target, but reducing our projections after Starco Brands posted a lower than expected 2Q24 and did not provide 2024 guidance, as management continues to pivot to multiple new and expanded retailer relationships for virtually all their brands, including the addition of Costco as a key new partner.</li><li>We believe, beginning in 3Q24, Starco will take their stable of brands to a new level in terms of door penetration which, when combined with an aggressive focus on adding new categories, will position the company for strong top line and Adjusted EBITDA expansion for 2025 and beyond.</li><li>As such, we continue to view the future of Starco as strong, and we reiterate our Buy rating and $0.25 price target for STCB.</li></ul>

We are reiterating our Buy rating and $0.25 price target, but reducing our projections after Starco Brands posted a lower than expected 2Q24 and did not provide 2024 guidance, as management continues to pivot to multiple new and expanded retailer relationships for virtually all their brands, including the addition of Costco as a key new partner.We believe, beginning in 3Q24, Starco will take their stable of brands to a new level in terms of door penetration which, when combined with an aggressive focus on adding new categories, will position the company for strong top line and Adjusted EBITDA expansion for 2025 and beyond.As such, we continue to view the future of Starco as strong, and we reiterate our Buy rating and $0.25 price target for STCB.

elf Beauty Inc - STCB: 2Q Review: Adding Costco, Planning for the Future, Reiterate Buy

urban-gro, Inc. operates as an agricultural technology systems integrator. The Company designs irrigation and water treatment systems, inventory monitoring, cultivation equipment, and pest management solutions for cannabis growing industry. urban-gro serves customers in the United States and Canada.

<ul><li>We are reiterating our Buy rating, $8 price target and slightly tweaking our projections after urban-gro, as part of their engagement with a new accounting firm, announced a restatement of historic results, driven by deferred tax liabilities.</li><li>We note the restatement will have no material impact on historic Revenue, Adjusted EBITDA and cash flows.</li><li>That said, we now do not expect the company to announce 2Q24 results now before October.</li></ul>

We are reiterating our Buy rating, $8 price target and slightly tweaking our projections after urban-gro, as part of their engagement with a new accounting firm, announced a restatement of historic results, driven by deferred tax liabilities.We note the restatement will have no material impact on historic Revenue, Adjusted EBITDA and cash flows.That said, we now do not expect the company to announce 2Q24 results now before October.

UGRO: View 2Q Delay, Restatement as Immaterial; Setting up 3Q, Reiterate Buy