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Retail Sector Recovering Faster Than Expected: 5 Winners
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Seven months into 2021, the retail sector has bounced back from the lows witnessed during the peak of the pandemic that left stores shuttered for weeks. Although there is a long way to go, the recovery is taking place faster than expected.
According to Mastercard SpendingPulse, retail sales increased in July for the 11th consecutive month, indicating that the economy is on track for a speedy recovery. Moreover, the rise comes despite a surge in the Delta variant cases of coronavirus, which haven’t dampened the confidence of either retailers or consumers.
Retail Sales Increase in July
According to the latest Mastercard SpendingPulse report, retail sales jumped 10.9% on a year-over-year basis in July. This is the 11th consecutive month of growth in retail sales. One of the main reasons behind this jump is that people have more cash in hand now partly owing to the Child Tax Credit.
Also, pent-up savings are allowing consumers to shell out more, which is helping retail sales grow. Sales got a boost as the first six monthly Child Tax Credit payments gave parents some cash in hand, which they are spending in the ongoing back-to-school season.
This saw apparel sales climb a whopping 80% year over year in July. Besides, sales at departmental stores increased 44.8% from a year ago.
E-commerce drove retail sales over the past year as people stayed indoors due to the pandemic. However, the mass vaccination drive has given people the due confidence to step out of their homes, which is resulting in a surge in in-store sales. In July, in-store sales made up for 81.9% of the overall retail sales, up 15.5% year over year.
E-Commerce Drives Retail Sales
The concept of e-commerce has been in the United States for years now, but not too many believed in shopping online. Although in-store sales jumped substantially in July, e-commerce remained a key driver.
According to a separate report by eMarketer, e-commerce sales have been on the rise and are projected to grow 17.9% in 2021, reaching $933.30 billion. Moreover, e-commerce sales are projected to cross the $1 trillion mark by 2022 and comprise 20% of overall retail sales by 2024.
Although people are a lot confident now, thanks to the vaccine, a surge in COVID-19 cases might again lead to more dependency on e-commerce.
Our Choices
Even as people step out of their homes, online shopping will continue to be a safe bet for millions given its safety and convenience. This is thus the right opportunity to invest in retail stocks that have a strong online presence.
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 the current year is 46.2%. The Zacks Consensus Estimate for current-year earnings has improved 5.3% over the past 30 days. Hibbett Sports has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vera Bradley, Inc. (VRA - Free Report) is a designer, producer, marketer and retailer of accessories for women. Its products include handbags, accessories, and travel and leisure items.
The company’s expected earnings growth rate for the current year is 49.2%. The Zacks Consensus Estimate for current-year earnings has improved 9.3% over the past 30 days. Vera Bradley has a Zacks Rank #2 (Buy).
DICKS Sporting Goods, Inc. (DKS - Free Report) operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories, and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, tennis, golf and water sports.
The company’s expected earnings growth rate for the current year is 46.4%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 30 days. Dicks Sporting carries a Zacks Rank #2.
Ulta Beauty Inc. (ULTA - Free Report) offers a wide range of products, including cosmetics, fragrance, skincare, hair care, bath and body products, and salon styling tools in stores.
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 1.2% over the past 30 days. Ulta Beauty has a Zacks Rank #2.
Ethan Allen Interiors Inc. is a leading interior design company and manufacturer and retailer of quality home furnishings.
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 4% over the past 30 days. Ethan Allen sports a Zacks Rank #1.
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Retail Sector Recovering Faster Than Expected: 5 Winners
Seven months into 2021, the retail sector has bounced back from the lows witnessed during the peak of the pandemic that left stores shuttered for weeks. Although there is a long way to go, the recovery is taking place faster than expected.
According to Mastercard SpendingPulse, retail sales increased in July for the 11th consecutive month, indicating that the economy is on track for a speedy recovery. Moreover, the rise comes despite a surge in the Delta variant cases of coronavirus, which haven’t dampened the confidence of either retailers or consumers.
Retail Sales Increase in July
According to the latest Mastercard SpendingPulse report, retail sales jumped 10.9% on a year-over-year basis in July. This is the 11th consecutive month of growth in retail sales. One of the main reasons behind this jump is that people have more cash in hand now partly owing to the Child Tax Credit.
Also, pent-up savings are allowing consumers to shell out more, which is helping retail sales grow. Sales got a boost as the first six monthly Child Tax Credit payments gave parents some cash in hand, which they are spending in the ongoing back-to-school season.
This saw apparel sales climb a whopping 80% year over year in July. Besides, sales at departmental stores increased 44.8% from a year ago.
E-commerce drove retail sales over the past year as people stayed indoors due to the pandemic. However, the mass vaccination drive has given people the due confidence to step out of their homes, which is resulting in a surge in in-store sales. In July, in-store sales made up for 81.9% of the overall retail sales, up 15.5% year over year.
E-Commerce Drives Retail Sales
The concept of e-commerce has been in the United States for years now, but not too many believed in shopping online. Although in-store sales jumped substantially in July, e-commerce remained a key driver.
According to a separate report by eMarketer, e-commerce sales have been on the rise and are projected to grow 17.9% in 2021, reaching $933.30 billion. Moreover, e-commerce sales are projected to cross the $1 trillion mark by 2022 and comprise 20% of overall retail sales by 2024.
Although people are a lot confident now, thanks to the vaccine, a surge in COVID-19 cases might again lead to more dependency on e-commerce.
Our Choices
Even as people step out of their homes, online shopping will continue to be a safe bet for millions given its safety and convenience. This is thus the right opportunity to invest in retail stocks that have a strong online presence.
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 the current year is 46.2%. The Zacks Consensus Estimate for current-year earnings has improved 5.3% over the past 30 days. Hibbett Sports has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vera Bradley, Inc. (VRA - Free Report) is a designer, producer, marketer and retailer of accessories for women. Its products include handbags, accessories, and travel and leisure items.
The company’s expected earnings growth rate for the current year is 49.2%. The Zacks Consensus Estimate for current-year earnings has improved 9.3% over the past 30 days. Vera Bradley has a Zacks Rank #2 (Buy).
DICKS Sporting Goods, Inc. (DKS - Free Report) operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories, and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, tennis, golf and water sports.
The company’s expected earnings growth rate for the current year is 46.4%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 30 days. Dicks Sporting carries a Zacks Rank #2.
Ulta Beauty Inc. (ULTA - Free Report) offers a wide range of products, including cosmetics, fragrance, skincare, hair care, bath and body products, and salon styling tools in stores.
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 1.2% over the past 30 days. Ulta Beauty has a Zacks Rank #2.
Ethan Allen Interiors Inc. is a leading interior design company and manufacturer and retailer of quality home furnishings.
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 4% over the past 30 days. Ethan Allen sports a Zacks Rank #1.