Morgan Stanley released its eighth annual AlphaWise intern survey on Tuesday, reporting a continued splintering of consumer preferences in apparel and athletic footwear while handbag choices grew more concentrated around Coach and high-end brands.
The raw survey results were cited by Morgan Stanley as supporting its current positioning on related stocks - an overweight rating on Tapestry (TPR) and an underweight stance on Lululemon (LULU).
Apparel category trends
The survey found that the apparel space has become more fragmented as multiple category leaders ceded share. Lululemon and Zara were among the names that lost ground, while Ralph Lauren and Vuori emerged as notable share gainers according to respondents.
For Lululemon specifically, preference among the interns declined for the third year in a row and reached the lowest level recorded in the survey's history. Morgan Stanley interpreted this pattern as consistent with its underweight view on the stock and as evidence of ongoing brand pressure and heightened competitive intensity in the apparel market.
Handbag preferences concentrate
In contrast to apparel, the handbag category moved toward concentration. Coach climbed to the top position in the survey for the first time ever, and its increased share was accompanied by strengthening preference for luxury brands. Morgan Stanley said this concentration underlines Coach's momentum and supports its overweight rating on Tapestry.
Athletic footwear fragmentation
Athletic footwear preferences continued to fragment as well, with Nike losing share for the fifth consecutive year. The brand's share dropped to the lowest level recorded in the survey's history, and the pace of losses accelerated relative to the prior year.
By contrast, On Running recorded the largest year-over-year share gain in athletic footwear and rose to the number two preference ranking among survey respondents.
The survey results offer a snapshot of shifting brand dynamics among a cohort of interns and were used by Morgan Stanley to reinforce its current equity recommendations for the names mentioned.