The holiday season is expected to begin earlier this year in October and is anticipated to be the best ever, according to Mastercard SpendingPulse. The retail sector had a bad time following the coronavirus outbreak in 2020 but bounced back just in time for a great holiday season.
This year, with millions already vaccinated and the economic reopening on track, sales are projected to hit a record high. E-commerce is once again going to play a major role in driving sales.
Holiday Sales to Hit a New High
According to Mastercard SpendingPulse, holiday season retail sales are projected to grow 7.4%, excluding automotive and gas. The holiday season will begin early this year like in 2020, which is further expected to help the retail sector. The "75 Days of Christmas" holiday season period will begin in October, with sales expected to grow 6.8% during this period.
Sales during the period from Nov 1 through Christmas Eve are expected to grow 7.4% on a year-over-year basis and 11.1% from 2019. Last year, holiday sales hit a record high both in terms of dollar gains and percentage points.
This year is expected to be even better. Pent-up savings and government stimulus are expected to further strengthen the spending power of consumers, according to the study. Retailers depend heavily on the holiday season every year for the bulk of their overall annual sales. This year too is expected to be a good one.
E-Commerce to Drive Holiday Sales
E-commerce has been playing a major role in driving holiday sales for the past few years. The importance of e-commerce further grew following the coronavirus outbreak, as millions shopped online on fears of contracting the virus.
Much like last year, e-commerce is projected to drive holiday sales this year too. Online revenues are projected to grow 7.6% year over year and a whopping 57% from 2019. Although e-commerce was already popular during the pre-pandemic era, last year saw an astounding jump in online sales, as COVID-related restrictions were strictly in place.
Shopping online, following the pandemic, has now turned into a habit and the study suggests that people will continue to shop online. In fact, retail sales are being driven by e-commerce for the past several months now. Online sales in August jumped 8.1% month over month and 82% from the previous year.
The retail sector is slowly trying to get back on its feet and the upcoming holiday season is likely to help boost sales. E-commerce will continue to play an integral role in driving sales despite millions being vaccinated. This is thus the right opportunity to invest in retail stocks that have a strong online presence. We have handpicked five stocks for you. Each of the stocks sports a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here. RH ( RH Quick Quote RH - Free Report) offers dominant merchandise assortments across a growing number of categories, including furniture, lighting, textiles, bath ware, décor, outdoor and garden, tableware, and child and teen furnishings.
The company’s expected earnings growth rate for the current year is 45.3%. The Zacks Consensus Estimate for current-year earnings has improved 14.2% over the past 30 days.
The TJX Companies, Inc. ( TJX Quick Quote TJX - Free Report) is a leading off-price retailer of apparel and home fashions in the United States and worldwide. It has more than 4,300 stores across the globe, which are well known for their unique value proposition of brands, fashion, price, and quality.
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 12.2% over the past 30 days.
Capri Holdings Limited ( CPRI Quick Quote CPRI - Free Report) provides women’s and men’s accessories, footwear, and ready-to-wear, as well as wearable technology, watches, jewelry, eyewear, and a full line of fragrance products.
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 3.4% over the past 30 days.
Foot Locker, Inc. ( FL Quick Quote FL - Free Report) is a retailer of athletic shoes and apparel. The company operates websites and mobile apps, aligned with the brand names of store banners, comprising footlocker.com, ladyfootlocker.com, six02.com, kidsfootlocker.com, champssports.com, footaction.com, footlocker.ca, footlocker.eu, footlocker.com.au, sidestep-shoes.com, footlocker.hk, footlocker.sg, and footlocker.my.
As of Jul 31, 2021, the company operated 2,911 stores across 27 countries in North America, Europe, Asia, Australia, and New Zealand.
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 18.9% over the past 30 days.
Genesco Inc. ( GCO Quick Quote GCO - Free Report) sells footwear, headwear, and accessories in retail stores in the United States and Canada. The company sells its products principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Shack, Hat Zone, Head Quarters, and Cap Connection, and on websites.
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 21.5% over the past 30 days.