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U.S. Retail Sales Tick Up for Third Straight Month: 4 Picks
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Americans continued with their spending spree in March, amid lingering supply chain woes and rising prices. U.S. retail sales grew for the third successive month, albeit at a lower rate from the month before. The Commerce Department stated that U.S. retail and food services sales in March rose 0.5% sequentially to $665.7 billion, following an upwardly revised reading of a 0.8% jump in February.
Industry experts pointed that soaring inflation is pushing the sales number higher. The consumer price index rose 1.2% month on month in March, following an increase of 0.8% in February. On a year-over-year basis, the metric rose 8.5%, the fastest pace since December 1981. This jump was primarily led by gasoline prices, thanks to the conflict between Russia and Ukraine as well as related sanctions.
Addressing shooting commodity prices is a top priority for the Federal Reserve and the policymakers have hinted at tightening the monetary policy methodically. The Federal Reserve has signaled a steady increase in the benchmark interest rate and shrinking of its $9-trillion balance sheet by approximately $95 billion a month. The officials have agreed to trim $60 billion a month from the U.S. central bank's Treasury holdings and $35 billion from holdings of mortgage-backed securities.
Category-Wise Sales
Evidently, steady wage gains, lower unemployment rate and decent underlying demand have also been contributing to retail sales. The Commerce Department’s report suggests that sales at building material & supplies dealers rose 0.5%, while the same at clothing & clothing accessories outlets jumped 2.6% on a sequential basis. Sales at both food & beverage stores as well as food services & drinking places grew 1%. Sales at miscellaneous store retailers were up 0.8%.
At sporting goods, hobby, musical instrument, & book stores, sales advanced 3.3%. We note that sales at furniture & home furnishings stores as well as electronics & appliance stores increased 0.7% and 3.3%, respectively. The metric climbed 5.4% at general merchandise stores. Meanwhile, receipts at gasoline stations were up 8.9%.
However, sales at health & personal care stores declined 0.3%, while the same at motor vehicle & parts dealers decreased 1.9%. Sales at non-store retailers fell 6.4% as more people returned to stores.
Will the Sales Momentum Last?
Undoubtedly, the industry is currently dealing with supply chain bottlenecks, rising freight charges and labor shortages. The inability to meet the demand, failure to restock inventory at fair prices or delay in getting the products delivered to consumers’ doorsteps could compound retailers’ woes.
That said, industry participants have been focusing on deepening engagements with consumers, adding more compelling products, and enhancing digital and data analytics capabilities. Inventory management, supply-chain enhancement, cost-structure realignment and investment to accelerate digitization have been working in favor of companies like Target Corporation (TGT - Free Report) , Costco Wholesale Corporation (COST - Free Report) , Tapestry, Inc. (TPR - Free Report) and Boot Barn Holdings, Inc. (BOOT - Free Report) . These stocks have either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
4 Prominent Picks
Target, a general merchandise retailer, is a potential pick. The company has been making investments to enhance omni-channel capabilities, develop new brands, refurbish stores and expand same-day delivery options to provide a seamless shopping experience to customers. Markedly, Target has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail landscape. The company is always striving to build on its partnerships, especially with popular and high-profile brands.
Impressively, Target has a trailing four-quarter earnings surprise of 21.3%, on average. This Zacks Rank #1 company has an estimated long-term earnings growth rate of 16.5%. The Zacks Consensus Estimate for Target’s current financial year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the year-ago period.
You may bet on Costco. The company’s growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have been contributing to its performance. Cumulatively, these factors have been aiding this operator of membership warehouses in registering an impressive comparable sales run. Costco has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, whether online or in stores.
Costco has a trailing four-quarter earnings surprise of 13.3%, on average. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 9.1%. The Zacks Consensus Estimate for Costco’s current financial year sales and EPS suggests growth of 13.3% and 17.4%, respectively, from the year-ago period.
Tapestry is also worth betting on. This provider of luxury accessories and branded lifestyle products has been benefiting from the successful execution of the Acceleration Program. The program aims to transform the company into a leaner and more responsive organization. It intends to build significant data and analytics capabilities, focusing on enhancing digital and omni-channel capabilities and operating with a clearly defined path and strategy for each of its brands, namely Coach, Kate Spade, and Stuart Weitzman.
Tapestry has a trailing four-quarter earnings surprise of 28.2%, on average. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 10%. The Zacks Consensus Estimate for Tapestry’s current financial year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period.
You may also invest in Boot Barn Holdings. This lifestyle retailer of western and work-related footwear, apparel and accessories has been successfully navigating through the challenging environment, courtesy of merchandising strategies, omni-channel capabilities and better expense management as well as marketing. This combined with the expansion of the store base has helped Boot Barn Holdings gain market share and strengthen its position in the industry.
This Zacks Rank #2 company has an estimated long-term earnings growth rate of 20%. The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago period.
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U.S. Retail Sales Tick Up for Third Straight Month: 4 Picks
Americans continued with their spending spree in March, amid lingering supply chain woes and rising prices. U.S. retail sales grew for the third successive month, albeit at a lower rate from the month before. The Commerce Department stated that U.S. retail and food services sales in March rose 0.5% sequentially to $665.7 billion, following an upwardly revised reading of a 0.8% jump in February.
Industry experts pointed that soaring inflation is pushing the sales number higher. The consumer price index rose 1.2% month on month in March, following an increase of 0.8% in February. On a year-over-year basis, the metric rose 8.5%, the fastest pace since December 1981. This jump was primarily led by gasoline prices, thanks to the conflict between Russia and Ukraine as well as related sanctions.
Addressing shooting commodity prices is a top priority for the Federal Reserve and the policymakers have hinted at tightening the monetary policy methodically. The Federal Reserve has signaled a steady increase in the benchmark interest rate and shrinking of its $9-trillion balance sheet by approximately $95 billion a month. The officials have agreed to trim $60 billion a month from the U.S. central bank's Treasury holdings and $35 billion from holdings of mortgage-backed securities.
Category-Wise Sales
Evidently, steady wage gains, lower unemployment rate and decent underlying demand have also been contributing to retail sales. The Commerce Department’s report suggests that sales at building material & supplies dealers rose 0.5%, while the same at clothing & clothing accessories outlets jumped 2.6% on a sequential basis. Sales at both food & beverage stores as well as food services & drinking places grew 1%. Sales at miscellaneous store retailers were up 0.8%.
At sporting goods, hobby, musical instrument, & book stores, sales advanced 3.3%. We note that sales at furniture & home furnishings stores as well as electronics & appliance stores increased 0.7% and 3.3%, respectively. The metric climbed 5.4% at general merchandise stores. Meanwhile, receipts at gasoline stations were up 8.9%.
However, sales at health & personal care stores declined 0.3%, while the same at motor vehicle & parts dealers decreased 1.9%. Sales at non-store retailers fell 6.4% as more people returned to stores.
Will the Sales Momentum Last?
Undoubtedly, the industry is currently dealing with supply chain bottlenecks, rising freight charges and labor shortages. The inability to meet the demand, failure to restock inventory at fair prices or delay in getting the products delivered to consumers’ doorsteps could compound retailers’ woes.
That said, industry participants have been focusing on deepening engagements with consumers, adding more compelling products, and enhancing digital and data analytics capabilities. Inventory management, supply-chain enhancement, cost-structure realignment and investment to accelerate digitization have been working in favor of companies like Target Corporation (TGT - Free Report) , Costco Wholesale Corporation (COST - Free Report) , Tapestry, Inc. (TPR - Free Report) and Boot Barn Holdings, Inc. (BOOT - Free Report) . These stocks have either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
4 Prominent Picks
Target, a general merchandise retailer, is a potential pick. The company has been making investments to enhance omni-channel capabilities, develop new brands, refurbish stores and expand same-day delivery options to provide a seamless shopping experience to customers. Markedly, Target has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail landscape. The company is always striving to build on its partnerships, especially with popular and high-profile brands.
Impressively, Target has a trailing four-quarter earnings surprise of 21.3%, on average. This Zacks Rank #1 company has an estimated long-term earnings growth rate of 16.5%. The Zacks Consensus Estimate for Target’s current financial year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the year-ago period.
You may bet on Costco. The company’s growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have been contributing to its performance. Cumulatively, these factors have been aiding this operator of membership warehouses in registering an impressive comparable sales run. Costco has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, whether online or in stores.
Costco has a trailing four-quarter earnings surprise of 13.3%, on average. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 9.1%. The Zacks Consensus Estimate for Costco’s current financial year sales and EPS suggests growth of 13.3% and 17.4%, respectively, from the year-ago period.
Tapestry is also worth betting on. This provider of luxury accessories and branded lifestyle products has been benefiting from the successful execution of the Acceleration Program. The program aims to transform the company into a leaner and more responsive organization. It intends to build significant data and analytics capabilities, focusing on enhancing digital and omni-channel capabilities and operating with a clearly defined path and strategy for each of its brands, namely Coach, Kate Spade, and Stuart Weitzman.
Tapestry has a trailing four-quarter earnings surprise of 28.2%, on average. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 10%. The Zacks Consensus Estimate for Tapestry’s current financial year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period.
You may also invest in Boot Barn Holdings. This lifestyle retailer of western and work-related footwear, apparel and accessories has been successfully navigating through the challenging environment, courtesy of merchandising strategies, omni-channel capabilities and better expense management as well as marketing. This combined with the expansion of the store base has helped Boot Barn Holdings gain market share and strengthen its position in the industry.
This Zacks Rank #2 company has an estimated long-term earnings growth rate of 20%. The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago period.