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SFM & 3 Retail Stocks Holding Strong as Consumer Confidence Slips

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Key Takeaways

  • SFM, URBN, COST and BJ are well-positioned despite a drop in U.S. consumer confidence in June.
  • SFM's growth is fueled by innovation, pricing strategy, store expansion and private label momentum.
  • URBN leverages digital growth, brand strength and operational agility to drive profitability.

U.S. consumer sentiment declined in June, reflecting rising concerns over job concerns and broader economic challenges. The Conference Board's Consumer Confidence Index dipped by 5.4 points to 93.0, down from 98.4 in May, signaling growing unease among households.

The Present Situation Index, which assesses current views on business and labor market conditions, fell 6.4 points to 129.1. At the same time, the Expectations Index, which tracks short-term outlooks for income, business conditions and employment, slipped 4.6 points to 69.0.

A primary driver behind this drop is the ongoing concern over trade policies. Although the Trump administration has taken steps to ease tensions, many consumers still view tariffs as a threat to economic stability. Their connection to rising prices and market disruptions has left a lasting mark on household confidence. Escalating geopolitical tensions have also weighed on the consumer outlook.

However, even in this environment of pessimism, some players are better equipped to weather the storm. Their solid business models, loyal customer bases, and focus on value and essentials provide them with a distinct advantage. Companies such as Sprouts Farmers Market, Inc. (SFM - Free Report) , Urban Outfitters, Inc. (URBN - Free Report) , Costco Wholesale Corporation (COST - Free Report) and BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) are better positioned to navigate shifts in consumer behavior.

Past-Year Stock Price Performance of SFM, URBN, COST & BJ

Zacks Investment Research
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4 Prominent Stocks

Sprouts Farmers: Product Innovation & Competitive Pricing

Sprouts Farmers, operating in a highly fragmented grocery industry, is a compelling option. The company has adopted a multifaceted approach to expand its customer base and cater to evolving consumer preferences. Through product innovation, targeted marketing and competitive pricing, Sprouts Farmers ensures that its offerings resonate with its diverse customer base. The company’s commitment to offering fresh, natural and organic products aligns with the growing consumer demand for healthier food options. Its store expansion and growing private label mix reflect solid momentum ahead. 

The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings per share (EPS) implies growth of 13.7% and 35.5%, respectively, from the year-ago reported figure. SFM, which sports a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 16.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Urban Outfitters: Multi-Brand Strength & Digital Reach

URBN’s major brands — Anthropologie, Free People and Urban Outfitters — are showing momentum across both digital and physical channels, driven by curated assortments, brand-right pricing and improved marketing execution. Growth in newer concepts like FP Movement and Nuuly adds to URBN’s multi-brand leverage, expanding its reach and deepening customer engagement. Across the board, a focus on customer acquisition, full-price selling and creative content is enhancing profitability. Strategic initiatives such as store optimization, supply-chain agility and international synergies reinforce Urban Outfitters’ long-term growth potential.

The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales and EPS suggests growth of 8.5% and 22.2%, respectively, from the year-ago reported figure. URBN, which sports a Zacks Rank #1, has a trailing four-quarter earnings surprise of 29%, on average. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Costco: Leveraging Membership Model for Success

Costco has navigated market ups and downs effectively, driven by strategic investments, a customer-centric approach, merchandise initiatives and a strong emphasis on memberships. By identifying untapped markets and tailoring offerings to customer preferences, Costco has deepened its market presence. The company’s high membership renewal rates, efficient supply chain management and bulk purchasing power ensure competitive pricing and foster strong customer loyalty.

The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS calls for growth of 8.1% and 12%, respectively, from the year-ago reported figure. COST, which carries a Zacks Rank #3 (Hold), has a trailing four-quarter earnings surprise of 0.4%, on average.

BJ's Wholesale: Membership & Digitization Drive Growth

BJ's Wholesale continues to demonstrate strong performance, fueled by its strategic focus on membership growth and digital innovations. The company remains committed to enhancing omnichannel capabilities and providing value to customers. These endeavors have contributed to growth in membership signups and renewals, resulting in higher membership fee income. Offering members convenient options such as same-day delivery, curbside pick-up, and buy online and pick up in-club, the company ensures an engaging and seamless digital shopping experience. BJ's Wholesale has been steadily increasing its footprint, targeting high-growth regions and underserved markets. 

The Zacks Consensus Estimate for BJ's Wholesale’s current financial-year sales and EPS suggests growth of 5.5% and 6.2%, respectively, from the year-ago reported figure. BJ, which carries a Zacks Rank #3, has a trailing four-quarter earnings surprise of 17.7%, on average.

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