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Retail Sales Getting a Boost From E-Commerce: 5 Solid Picks

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The U.S. retail sector, which was jolted by the COVID-19 pandemic, is gradually trying to get back on its feet. The year 2021 has seen a good start with sales jumping in the first two months of the year. According to Mastercard SpendingPulse, retail sales jumped in February, as consumers felt more confident spending on a variety of things.

E-commerce also has been playing a major role in helping retail sales grow as most people are shopping online or choosing curbside pickup facilities. Also, the second round of stimulus checks has started reaching people, which is giving them more confidence to spend and is thus likely to boost overall retail sales.

Retail Sales Jump in February

According to the latest Mastercard Spending Pulse, retail sales grew 4.6% year over year in February after adjusted for the leap year 2020. Without seasonal adjustments, retail sales gained 1%.

As more people watched football, grocery sales jumped 30% three days prior to the matches. Overall grocery sales increased 12.4% in February on a year-over-year basis. Furniture and furnishing sales increased 8.6%, while apparel sales declined 5.3%. One of the primary reasons behind the rise in February was because people spent more freely as the coronavirus stimulus checks started reaching them in January.

E-commerce Powers Retail Sales

Over the past few months, particularly since the COVID-19 outbreak, people have been relying more on e-commerce, which has also been saving the retail sector. Online retail sales grew 54.7% in February on a year-over-year basis. Also, apparel sales, which otherwise declined, saw a 73.9% jump in online sales.

This once again shows that an increasing number of people are shopping online. According to Adobe Analytics, U.S. online sales during the 2020 holiday season grew 32% from 2019, hitting a record $188.2 billion. The momentum continued into January and the trend is continuing.

Curbside pickup or BOPIS (Buy Online Pick-Up in Store) has also gained popularity during the pandemic as more people prefer contactless shopping on fears of contracting the virus. BOPIS increased substantially during the holiday season. The trend is expected to last through the near term.

Our Choices

Ethan Allen Interiors Inc. (ETH - Free Report) is a leading interior design company, and a manufacturer and retailer of quality home furnishings. The company offers free interior design service to its clients and sells a full range of furniture products and decorative accessories through ethanallen.com and a network of the Design Centers in the United States and abroad.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 49.2% over the past 60 days. Ethan Allen has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortune Brands Home & Security, Inc. (FBHS - Free Report) specializes in designing, manufacturing and selling home and security products, primarily used in the kitchen and bath cabinetry, plumbing and accessories, entry door systems, and security products applications.

The company’s expected earnings growth rate for the current year is 18.9%. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the past 60 days. Fortune Brands Home & Security has a Zacks Rank #2 (Buy).

Hibbett Sports, Inc. (HIBB - Free Report)  typically caters to small counties with a population ranging from 25,000-75,000. Its merchandise assortment is focused on footwear, athletic equipment and apparel.

The company’s expected earnings growth rate for next year is 5.9%. The Zacks Consensus Estimate for current-year earnings has improved 41.1% over the past 60 days. Hibbett Sports has a Zacks Rank #1.

Tapestry, Inc. (TPR - Free Report) is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. The company offers lifestyle products, which include handbags, women’s and men’s accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrance and watches.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 12.3% over the past 60 days. Tapestry has a Zacks Rank #2.

Dillards, Inc. (DDS - Free Report) is a large departmental store chain featuring fashion apparel and home furnishings. As of Jan 30, 2021, Dillard’s had about 250 namesake outlets and 32 clearance centers spanning in 29 states. The company also sells its merchandize through the Internet at www.dillards.com. 

The company’s expected earnings growth rate for next year is 0.4%. The Zacks Consensus Estimate for current-year earnings has improved 31.7% over the past 60 days. Dillards has a Zacks Rank #2.

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