Spark Global Limited reports:
As the U.S. holiday shopping season kicks into high gear this week, investors are focusing on stocks of some popular retailers, weighing the possibility of supply-chain problems against expected strong consumer demand.
For years, Black Friday, the day after the Thanksgiving holiday in the United States, has unofficially marked the start of the holiday shopping period and is one of the busiest shopping days of the year.
But the current coronavirus pandemic and its impact on supply may be causing shoppers to leave early, as evidenced by a recent Commerce Department report that showed US retail sales surged in October.
“We are in a very different place now than we have been for the last two years. “Christmas is a four-month season that starts in October,” said Phil Orlando, chief equity strategist and head of the client portfolio management team at Federated Hermes(NYSE :FHI) in New York.
Among other trends, average Black Friday sales discounts were lower than in previous years, according to data compiled by Refinitiv and StyleSage Co, suggesting consumers may not see deals they’ve seen before.
But analysts are more optimistic about the holiday shopping season, according to Refinitiv data. It noted that discount stores and home and decor businesses are expected to be among the strongest in same-store sales growth.
Many retailers have outperformed the market this year. An S&P retail EXCHANGE-traded fund is up 54% since Dec. 31, compared with a year-to-date gain of about 25% for the S&P 500.
Refinitiv noted that many companies faced “tough comparisons” in the fourth quarter compared to the same period last year, when sales were strong but still made optimistic forecasts for the quarter, Including Crocs(NASDAQ :CROX), Williams-Sonoma(NYSE :WSM), Lowe’s(NYSE :LOW) Cos, Home Depot (NYSE :HD), Lululemon Athletica(NASDAQ :LULU), and Target (NYSE: TGT).
“They did really well last year, and you’re still seeing strong numbers, which shows that strong demand for these products is holding up really well,” said Jharonne Martis, Refinitiv’s director of consumer research.
Retailers with the biggest gains so far this year include Bath & Body Works, Tractor Supply(NASDAQ :TSCO) and Etsy(NASDAQ :Etsy).
Supply disruptions have been cited in recent earnings reports from retailers, and strategists say inventory levels could be an issue for some retailers this season.
This week, Gap Inc. (NYSE :GPS). The company cut its full-year outlook due to plant closures and other supply chain disruptions, and its shares plunged about 23% on Wednesday.
Last week, Wal-Mart (NYSE:WMT) raised its annual sales and profit forecasts, but global supply chain disruptions hurt its third-quarter margins.
Refinitiv’s analysis also suggests online spending will be strong again this holiday season, so all eyes will be on Amazon.com.
“The web is going to rule,” Orlando says. Overall, he said, the companies likely to do better this season are those that can find a way around the supply logjam, such as Amazon and possibly Target, Walmart and Costco (NASDAQ:COST).
Stocks of major department stores that typically see heavy holiday traffic will also be closely watched, including Macy’s (NYSE:M), Kohl’s (NYSE:KSS) and Nordstrom (NYSE:JWN), as well as consumer favorites like Apple (NASDAQ:AAPL).
Macy’s said last week that it was well stocked for the holiday season.
Reprint indicated source：Spark Global Limited information