Holiday retail sales set to increase this year: 7 top picks

Retail sales in the United States rebounded in August after falling sharply in July. Strong consumer spending defying the spread of the Delta variant of the coronavirus surprised many financial experts. The positive momentum is expected to continue as several market researchers predicted strong holiday retail sales this year.

Strong retail sales in August

The Commerce Department said retail sales rebounded into positive territory with a 0.7% gain in August after falling sharply the month before. Data for July have been revised downward from a decline of 1.1% to a decline of 1.8%. The consensus estimate for August also called for a drop of 0.9%.

Core retail sales (excluding auto sales) jumped to 1.8% in August from the consensus estimate of a 0.1% decline. Core retail sales in July were revised down 1% from a 0.4% drop reported earlier.

Despite the growing threat from the Delta variant, in absolute terms retail sales rose 15.1% year-over-year in August. Online sales jumped 5.3% last month. Restaurants and bars suffered the most from the resurgence of COVID-19 infection, with sales remaining stable month over month. Yet year over year, restaurant and bar sales climbed 31.9%.

Impressive projections for holiday sales 2021

On September 14, CNBC announced strong holiday retail sales projections from several market researchers. According to the report, Deloitte predicts holiday retail sales in 2021 will increase 7-9% year-over-year to $ 1.28-1.3 trillion between November and January. Of the total, e-commerce sales are expected to grow 11-15% year over year to reach $ 210 billion to $ 218 billion.

Mastercard SpendingPulse has estimated that US retail sales will grow 7.4% year-over-year in 201 from November 1 to December 24. In-store sales are expected to rebound this year with an expected 6.6% year-over-year jump, supported by continued strong demand.

Additionally, Bain forecast US retail sales to grow 7% year-on-year between November and December 2021. Additionally, KPMG expects US vacation retail sales to increase by 7% year-on-year in 2021. The KPMG survey found that, on average, US retailers expect online sales to grow 35% year-over-year this year.

Robust retail sales implications

Retail sales represent a significant portion of consumer spending in the United States. It’s important to note that consumer spending is the primary driver of the US economy, accounting for nearly 2/3 of GDP. The personal savings of Americans are approximately $ 2,000 billion. Dizzying economies allow people to meet their demands that were pent up during shutdowns and in turn force businesses to expand their scale of operations.

A growing US economy, a nationwide COVID-19 vaccination, a higher wage rate, solid job postings, record-breaking personal savings, an extremely low interest rate plan, and an impressive stock market (despite volatility in September) are likely to act as the engines for a strong holiday season.

Our top picks

We’ve narrowed down our search to seven retailers with strong potential for the remainder of 2021. These stocks have seen their earnings estimates revised over the past 30 days, indicating that the market expects these companies to do good business. short term. Finally, these stocks display a rank 1 of Zacks (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.

The graph below shows the price performance of our seven picks since the start of the year.

Zacks investment research

Image source: Zacks Investment Research

Best Buy Co. Inc. BBY operates as a retailer of technology products, services and solutions in the United States, Canada and Mexico. The company operates through two segments – domestic and international.

Demand for technological products and services remains strong. Strong consumer spending capacity, supported by government stimulus and high savings, is supporting demand. Strong omnichannel efforts have contributed to the growth of the company’s digital sales, in the home channel.

The company has an expected profit growth rate of 25.8% for the current year (end of January 2021). Zacks’ consensus estimate for current year earnings has improved 16.9% in the past 30 days.

Foot Locker Inc. FL is a sportswear and footwear retailer. The company operates in two segments, North America and International. The company benefited from strong demand for clothing and accessories. In particular, women’s and children’s footwear companies performed well. Less promotional activity and continued digital growth were also positive points.

The company has an expected profit growth rate of over 100% for the current year (end of January 2021). Zacks’ consensus estimate for current year earnings has improved 18.9% in the past 30 days.

The gap inc. GPS operates like a clothing retail business. It has benefited from the continued strength of the Old Navy and Athleta brands, improved marketing efforts, better brand management and advanced technology. He also reported strong growth in key metrics on a two-year basis, reflecting robust growth from pre-pandemic levels.

Sales benefited from the strength of its Old Navy and Athleta brands as well as a strong online lounge. This, combined with improved margins, contributed to the bottom line. Gap has raised its point of view for the 2021 fiscal year. Gap remains on track with its 2023 Power Plan.

The company has an expected profit growth rate of over 100% for the current year (ending January 2022). Zacks’ consensus estimate for current year earnings has improved 1.4% in the past 7 days.

Beauty Ulta Inc. ULTA operates as a retailer of beauty products in the United States. The company has been enjoying market share gains in major beauty categories for some time, with skincare taking the lead. Its top priority is to strengthen its omnichannel business and explore the potential of the physical and digital facets.

The company has an expected profit growth rate of over 100% for the current year (ending January 2022). Zacks’ consensus estimate for current year earnings has improved 22.8% in the past 30 days.

Kohl’s Corp. KSS operates as a retail company in the United States. It benefited from its strategic framework, which focuses on revenue growth, increasing operating margin, implementing disciplined capital management as well as adopting an agile culture, responsible and inclusive. Kohl’s strong brand portfolio and partnerships drive growth.

The company has an expected profit growth rate of over 100% for the current year (ending January 2022). Zacks’ consensus estimate for current year earnings has improved 43.3% in the past 30 days.

Macy’s Inc. M is an omnichannel retail organization, operating stores, websites and mobile apps. The company benefited from the efforts undertaken as part of the Polaris strategy, in particular by increasing assortments and optimizing the store portfolio.

During the second quarter of fiscal 2021, the company experienced solid growth in all three brands, namely; Macy’s, Bloomingdale’s and Bluemercury. Management is on track to strengthen its omnichannel capabilities with investments in online shopping experiences, data and analytics as well as better execution capabilities.

The company has an expected profit growth rate of over 100% for the current year (ending January 2022). Zacks’ consensus estimate for current year earnings has improved 0.5% in the past 7 days.

HR RH operates as a home furnishings retailer. It offers products in various categories, including furniture, lighting, textiles, bath items, decoration, outdoor and garden, tableware and home furnishings for children and adolescents.

The acceleration in demand for furniture and home furnishings is primarily attributable to strong housing market dynamics. The company shows strong profitability, supported by the focus on improving profit margins and creating a new and differentiating shopping experience with the addition of hospitality (restaurants as well as cafes) in new galleries.

The company has an expected profit growth rate of 45.3% for the current year (ending January 2022). Zacks’ consensus estimate for current year earnings has improved 10.6% in the past 7 days.

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Macys, Inc. (M): Free Stock Analysis Report

Kohls Corporation (KSS): Free Stock Analysis Report

Best Buy Co., Inc. (BBY): Free Stock Analysis Report

The Gap, Inc. (GPS): Free Stock Analysis Report

Foot Locker, Inc. (FL): Free Stock Analysis Report

Ulta Beauty Inc. (ULTA): Free Stock Analysis Report

HR (HR): Free stock analysis report

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