Foot Locker (NYSE:FL) FBR Top List Pick, Hanesbrands (NYSE:HBI)Removed

While FBR continues to like what Hanesbrands (NYSE:HBI) has done to deal with soaring cotton prices, they still believe it may take time for them to implement the changes, and have placed Foot Locker (NYSE:FL) as their as their "Top List Pick" while removing Hanesbrand.

FBR said, "With strong proxy data points out of competitor Finish Line (Nasdaq:FINL) and, more importantly, vendor partner Nike (NYSE:NKE), which posted North American futures orders +16% (sequentially accelerating from +15% in 2Q), we move Foot Locker to the FBR Top Picks list...While we continue to be constructive on Hanesbrands (OP-rated), with cotton prices at historic highs, near-term catalysts are lacking to offset the overhang (more sentiment than fundamentals, in our view) on shares. We continue to believe Hanesbrands is better positioned than most apparel vendors to handle product cost inflation— it has bought/hedged out cotton better and longer, implemented price increases, and maintained more supply chain levers to offset inflationary pressures. As a result, we believe fundamentals should hold up better than most, but this may take time to play out. That said, a material reversal in cotton prices over the near term could be a major catalyst for HBI shares."

FBR Capital maintains an "Outperform" rating on Foot Locker, which closed Wednesday at $19.54, down $0.27, or 1.36 percent. Hanesbrands closed at $24.94, down $0.42, or 1.66 percent. FBR raised their price target on Foot Locker from $21 to $23.

The Finish Line (Nasdaq:FINL), Foot Locker (NYSE:FL), Dick's Sporting Goods (NYSE:DKS), True Religion (Nasdaq:TRLG), VF Corp (NYSE:VFC) Performing As Expected

FBR Capital said after visiting the physical locations of retailers like The Finish Line (Nasdaq:FINL), Foot Locker (NYSE:FL), Dick's Sporting Goods (NYSE:DKS), True Religion (Nasdaq:TRLG) and VF Corp (NYSE:VFC), they see the stores performing as they thought they would during Black Friday, with The Finish Line, Foot Locker and Dick's Sporting Goods enjoying significant traffic.

"On Black Friday, we visited stores in the Washington, D.C. metro area, including retail locations of The Finish Line (Nasdaq: FINL)(Outperform), Foot Locker (Outperform), Dick's Sporting Goods (Outperform), True Religion (Outperform), and VF Corp's (Market Perform) The North Face...We did not expect Black Friday traffic at any of our targeted stores to be "newsworthy" given that these stores are not doorbuster destinations offering loss-leading items or major discounts, particularly in light of inventory positions supportive of full-price selling. We also believe that an ongoing shift to online holiday sales and discounting earlier in the shopping season are chipping away at Black Friday's importance to overall brick and mortar apparel and footwear holiday sales.

"Relative to overall mall traffic, traffic at Finish Line and Foot Locker stores was strong. Traffic at Dick's Sporting Goods was also robust. At the Georgetown location of The North Face and the Georgetown and Pentagon City locations of True Religion, in-store traffic was relatively light. Lighter traffic at The North Face and True Religion did not surprise or concern us, given that these are not traditional Black Friday destinations as a result of their premium price points and lack of discounting.

"Overall, what we saw on Black Friday did not sway our thesis on any of our covered companies, but reinforced our positive view of athletic footwear retailers, given what we expect to be continued top-line momentum on solid margins. We think limited and targeted discounting at Finish Line and Foot Locker bode well for gross margins, while the strong product cycle in athletic footwear should continue to support the top line, even in the face of difficult year-over-year comparisons."

The Finish Line closed Monday at $17.57, dropping $0.18, or 1.01 percent. Footlocker ended the session at $19.05, gaining $0.40, or 2.14 percent. Dicks Sporting Goods was at $34.38. falling $0.35, or 1.01 percent. True Religion Apparel closed up at $22.80, increasing by $0.13, or 0.57 percent. V.F. Corporation closed at $83.33, down by $0.49, or 0.58 percent.