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Stores to Reopen While Shoppers Adjust Online: 5 Retail Picks (Revised)

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With restrictions to stem the spread of coronavirus being lifted, a number of retailers are slated to reopen their stores in the United States. Macy’s, Inc. (M - Free Report) plans to open 68 of its stores on May 4, and another 50 on May 11. Also, Simon Property Group, Inc. (SPG - Free Report) will be opening the majority of its stores, while all of Best Buy, Inc.’s (BBY - Free Report) 200 stores will be open to customers.

However, the big challenge lies in bringing back customers to the physical stores with no signs of coronavirus fears subsiding. Although most retailers are taking adequate measures for the sake of their employees and customers’ safety, people are still wary of stepping out of their homes. Instead, they may prefer shopping online for some more time. This has seen a surge in people shopping and placing orders online in the past month.

Big Challenge Ahead for Retailers

Macy’s plans to open 68 stores from Monday as U.S. states slowly start lifting stay-at-home restrictions. The retailer also plans to reopen another approximately 50 stores on May 11, and if coronavirus infection rates slide, Macy’s would reopen all its 775 stores by mid-June provided it gains approval from local and state governments.

Last week, mall giant Simon Property Group said that it will reopen 49 malls, while Best Buy will be opening all its stores. Apple, Inc. (AAPL) is also planning to open some of its stores in May after it closed down all its stores outside of China in March due to the coronavirus pandemic. However, it won’t be a normal reopening of the stores. Retailers are ensuring safety of shoppers and their employees as the pandemic is far from over.

Macy’s is making several significant changes to the shopping experience, including “no-touch” consultations in beauty departments and suspension of alteration services. Also, employees and customers will be encouraged to maintain social distancing practices, and hand sanitizer stations will be available throughout the stores.

Although Costco Wholesale Corporation (COST - Free Report) remained open during the pandemic, the wholesaler has made masks mandatory from May 4 for all employees and shoppers. Simon Property Group will provide CDC-approved masks and individual sanitizing wipe packets at no charge to shoppers who request them, and temperature checks using infrared thermometers.

However, it still will be a big challenge for physical stores to attract customers immediately after reopening. Fears of contracting the virus in public places and limits on testing in the United States are barriers to getting shoppers to feel comfortable returning to stores. U.S. retail sales fell 8.7% in March, the worst monthly decline on record.

Online Shopping to Gain

An increasing number of Americans have been shopping online for groceries and other household staples since the coronavirus outbreak. As the pandemic shows no signs of subsiding, customers are opting to make their purchases without setting foot in stores. According to Adobe Analytics, the number of orders placed online and picked up at stores jumped 208% between Apr 1 and Apr 20 compared to a year ago.

Also, e-commerce in the United States surged 49% from Mar 12 to Apr 11 compared to Mar 1 and Mar 11. Many retailers like Target Corporation (TGT - Free Report) and Walmart, Inc. (WMT - Free Report) which have remained open have been encouraging customers to use the buy online and pick up at store option.

Our Choices

Although retailers have finally started opening their stores, shoppers will be hesitant to return to stores since they’ve adjusted to being home for so long. This has seen retailers with a strong online presence gaining during this pandemic. Given this situation, it would be prudent to watch out for five stocks that are likely to rally on a sharp rise in online demand in the near future.

The Hain Celestial Group, Inc. (HAIN - Free Report) produces, distributes, markets, and sells various natural and organic foods as well as personal care products. The company offers groceries non-dairy beverages and frozen desserts, flour and baking mixes, cereals, condiments, cooking oils, infant and toddler food.

The company’s expected earnings growth rate for the current year is 10.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the past 60 days. Hain Celestial sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Campbell Soup Company (CPB - Free Report) together with its subsidiaries, is a worldwide manufacturer and marketer of high-quality, branded convenience food products. The company’s brands are sold in approximately 120 countries.

The company’s expected earnings growth rate for the current year is 22.61%. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the past 60 days.  Campbell Soup carries a Zacks Rank #2 (Buy).

Chewy, Inc. (CHWY - Free Report) provides pet food, pet products, pet medications, and other pet health products. Even in the coronavirus crisis, pet owners believe dog food, cat food, and cat litter are not discretionary expenses, hence their demand is consistent.

The company’s expected earnings growth rate for the current year is 27.6%. Its shares have jumped 28.6% in the past 30 days. Chewy presently carries a Zacks Rank #2.

Express, Inc. (EXPR - Free Report) is a specialty retailer of women's and men's apparel in the United States. It also sells its products through Express targets women and men between 20 and 30 years of age.

The company’s expected earnings growth rate for the current year is 23.1%. The company’s shares have gained 45.5% over the past 60 days.  Express holds a Zacks Rank #1.

The Kroger Company (K - Free Report) , together with its subsidiaries, manufactures and markets ready-to-eat cereal and convenience foods. It also has grocery delivery service Kroger Ship and sells its products to retailers through direct sales forces, as well as brokers and distributors.

The company’s expected earnings growth rate for the current year is 12.3%. The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the past 60 days. Currently, Kroger carries a Zacks Rank #2.

(We are reissuing this article to correct a mistake. The original article, issued on May 4, 2020, should no longer be relied upon.)

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