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Apparel Category Shimmers Bright in Holiday Season: 4 Buy Stocks

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As Americans refreshed their wardrobes this holiday season — thanks to the resumption of active social lifestyle, events and occasions — apparel companies witnessed strong demand. Sales at clothing & clothing accessories stores increased as more people ventured out and shopped for their loved ones. Undoubtedly, the pandemic-relief package and stepped-up vaccinations played a major role in boosting consumer confidence.

A report by Mastercard SpendingPulse indicates that the apparel category emerged as the biggest winner in the holiday season. The report highlighted a year-over-year increase of 47.3% in apparel sales during the festive season, running from Nov 1 through Dec 24. Holiday sales data from National Retail Federation further validates that Americans spent more money on apparel. The retail trade group stated that sales at clothing and clothing accessory stores grew 33.1%.

NRF chief economist Jack Kleinhenz said, “Worries about inflation and COVID-19 put pressure on consumer attitudes but did not dampen spending, and sales were remarkably strong. Even though many consumers began shopping in October, this was the strongest November and December we’ve ever seen.”

No wonder the holiday season, which accounts for a sizable chunk of yearly revenues, is a make or break for retailers. Supply-chain bottlenecks and labor shortages did pinch, but retailers channelized their strength and made strategic investments to provide consumers with a seamless shopping experience.

Industry participants have been focusing on deepening engagements with customers and enhancing digital as well as data analytics capabilities. They have been emphasizing on the launch of newer styles, customization options and refreshed store environments to woo shoppers. Undeniably, expedited delivery services like doorstep delivery, curbside pickup or buy online and pick up at store, and contactless payment gateway played a crucial role in maximizing the share of customers’ wallets.

That said, we have highlighted four stocks from the Retail - Apparel And Shoes industry. These stocks have a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

4 Prominent Picks

Tilly’s, Inc. (TLYS - Free Report) , a specialty retailer of casual apparel, footwear and accessories, is worth betting on. The company reported stellar holiday sales numbers. Favorable market dynamics, a compelling merchandise assortment, and a shift in consumers’ preference for shopping at stores contributed to the results.

Tilly’s highlighted that total net sales jumped 16.5% to $173.3 million during the holiday shopping period — the nine-week period ended Jan 1, 2022 — compared with $148.7 million for last year’s nine-week period ended Jan 2, 2021. Impressively, total comparable net sales, including physical stores and e-commerce, rose 14.1% for the 2021 holiday period compared with an increase of 2.7% in the year-ago period.

Investors can count on Zumiez Inc. (ZUMZ - Free Report) , a leading specialty retailer of apparel, footwear, accessories and hardgoods. We note that total net sales rose 9% for the nine-week period ended Jan 1, 2022 compared with the nine-week period ended Jan 2, 2021. For the same period, the company reported comparable sales growth of 6%.

In the period under review, Zumiez’s Men’s category registered the largest comparable sales growth, followed by Footwear, Accessories and Women’s. Management reaffirmed fiscal 2021 net sales year-over-year growth projection of just over 20%.

You may invest in Citi Trends, Inc. (CTRN - Free Report) , a specialty value retailer of apparel, accessories and home trends. Management was pleased with the company’s holiday season performance. Total sales for the nine-week period ended Jan 1, 2022 surged 20.1% to $204.8 million compared with $170.5 million for the same period in fiscal 2019. Comparable store sales rose 14.8% compared with the same period in 2019.

Citi Trends envisions fiscal 2021 total sales between $990 million and $995 million, which at the mid-point of the range indicates a 26.7% increase over fiscal 2020 and a 26.9% jump over fiscal 2019. The company expects earnings in the band of $6.70-$6.85 per share compared with $2.32 in fiscal 2020 and $1.41 in fiscal 2019.

Genesco Inc. (GCO - Free Report) is another potential pick. Despite supply chain woes, this specialty retailer of footwear and accessories reported decent holiday sales numbers. Total sales for the eight-week period ended Dec 25, 2021 increased 18% year over year.

Higher full-priced selling drove stronger-than-anticipated sales and profitability. Markedly, sales were up 8% at Journeys Group, 28% at Schuh Group, 53% at Johnston & Murphy Group and 104% at Licensed Brands. Genesco reiterated the current financial year earnings view of $6.40-$6.90 per share, with expectation now above the mid-point of the range.

In-Depth Zacks Research for the Tickers Above

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Zumiez Inc. (ZUMZ) - free report >>

Citi Trends, Inc. (CTRN) - free report >>

Genesco Inc. (GCO) - free report >>

Tilly's, Inc. (TLYS) - free report >>