Schools across the United States are about to start after the break and parents and students are busy with last-minute shopping. This might be good news for retailers that are struggling as rising costs have made consumers spend cautiously.
The back-to-school season is an important shopping window, that retailers bank on every year. Last year, the back-to-school shopping season proved good for retailers and the prediction is that sales will touch 2021 figures this time around. This makes for a good opportunity to invest in stocks like
Dollar Tree, Inc. ( DLTR Quick Quote DLTR - Free Report) , Dollar General Corporation ( DG Quick Quote DG - Free Report) , Costco Wholesale Corporation ( COST Quick Quote COST - Free Report) and The Buckle ( BKE Quick Quote BKE - Free Report) , which are expected to benefit during this shopping period. Back-to-School Sales to Grow
Higher prices are playing a major role but even then, the back-to-school shopping season is forecast to be good for retailers. According to the National Retail Federation (“NRF”), spending on school clothing and accessories is expected to touch last year’s record of $37 billion.
Sales hit a record high in 2021 after a no-show in 2020 as the pandemic forced students and teachers to shift to remote teaching and learning. The NRF estimates that families will be spending $864 on average per student this year for shopping during this period. This is $15 more than last year, which keeps sales on track to surpass last year’s figures.
Moreover, back-to-college spending is expected to jump 4% to $73.9 billion, according to the NRF. Together, combined spending is projected to hit $110.7 billion, increasing 2% from the 2021 record of $108.1 billion.
Higher prices have been a concern this year and many parents surveyed by the NRF plan to cut down spending on supplies and reuse last year’s stock. However, sales are expected to surpass last year’s figures.
A separate report from Deloitte, titled 2022 Deloitte Back-to-School Survey, shows that parents will spend $661 per student, on average, in grades K-12 this year compared to $612 spent in 2021, reflecting a jump of 8%.
Inflation is at a 41-year high but prices have been cooling lately, which might bring respite for retailers. Despite the inflationary pressures, the retail sector, which many had predicted would take a bad hit, has been trying to hold on to its ground. Retail sales came in unchanged in July after increasing 0.8% in June.
Excluding automobiles, fuel, building materials and food services, retail sales rose 0.8% in July after increasing 0.7% in June. This shows that the other segments have been faring well and driving sales.
Last year’s back-to-school season gave the retail sector a big boost when it was trying to bounce back from the pandemic-induced lows. This time too, it is expected to give retail sales a much-required push.
Our Choices Dollar Tree, Inc. is an operator of discount variety stores offering merchandise and other assortments. DLTR’s stores successfully operate in major metropolitan areas, mid-sized cities and small towns. Dollar Tree offers a wide range of quality everyday general merchandise in many categories, including houseware, seasonal goods, candy and food, toys, health and beauty care, gifts, party goods, stationery, books, personal accessories, and other consumer items.
Dollar Tree’s expected earnings growth rate for the current year is 40.9%. The Zacks Consensus Estimate for Dollar Tree’s current-year earnings has improved 0.4% over the past 60 days. DLTR has a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Dollar General Corporation is one of the largest discount retailers in the United States. DG offers a wider selection of merchandise, including consumable items, seasonal items, home products and apparel. Dollar General’s merchandise comprises national brands from leading manufacturers, as well as own private brand selections with prices at substantial discounts to national brands.
Dollar General’s expected earnings growth rate for the current year is 13.7%. The Zacks Consensus Estimate for Dollar General’s current-year earnings has improved 0.5% over the past 60 days. DG has a Zacks Rank #2.
Costco Wholesale Corporation sells high volumes of food and general merchandise (including household products and appliances) at discounted prices through membership warehouses. COST is one of the largest warehouse club operators in the United States. Costco Wholesale Corporation also operates e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.
Costco Wholesale Corporation’s expected earnings growth rate for the current year is 18.2%. The Zacks Consensus Estimate for Costco’s current-year earnings has improved 0.3% over the past 60 days. COST has a Zacks Rank #2.
The Buckle is a leading retailer of medium to better-priced casual apparel, footwear, and accessories for fashion-conscious young men and women. BKE markets a wide selection of brand names and private label casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories and footwear.
The Buckle’s expected earnings growth rate for the current year is 4.5%. The Zacks Consensus Estimate for Buckle’s current-year earnings has improved 2.3% over the past 60 days. BKE has a Zacks Rank #2.