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While coronavirus-inflicted challenges still persist, the Retail - Apparel And Shoes industry has been steadily making its way out of the woods. The pandemic severely impacted the industry as virus-wary shoppers remained confined at home, resulting in lower demand and consequently a huge blow to sales. However, things started looking up following measures undertaken to support households coupled with resumption of economic activities. The massive coronavirus stimulus package and COVID-19 vaccines have instilled confidence in Americans.
Quite obviously, the industry is striving to capitalize on any revival in demand with focus areas being value addition, product innovation and diversification, digitization, supply chain and disciplined capital spending. Industry experts cited that companies might need to rework on assortments to meet emerging trends in the post-pandemic world, including a more customized approach.
Well, players in the industry are leaving no stone unturned to expand customer base and improve top-line performance. Industry participants have been focusing on deepening engagements with consumers, creating innovative and compelling products, and enhancing digital and data analytics capabilities. We believe that launch of newer styles, customization options and refreshed store environments will enable them to resort to full price, instead of markdowns, which in turn will boost revenues.
Meanwhile, the passing of a coronavirus relief package worth $1.9 trillion that entitles eligible Americans to $1,400 stimulus checks is likely to trigger spending across the board. Clearly, demand will not be restricted to a few categories as was noticed when the pandemic hit the economy. The easing of COVID-19 restrictions, thanks to a rapid inoculation drive and the return to active social lifestyle, events and occasions are likely to spur demand for traditional categories such as apparel and other accessories.
That said, here we have highlighted five stocks from Retail - Apparel And Shoes industry that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price Performance in the Past Six Months
5 Prominent Picks
L Brands, Inc.’s LB sustained focus on cost containment, inventory management, merchandise and speed-to-market initiatives makes it a potential pick. Notably, the company continues to revamp its business by improving store experience, localizing assortments and enhancing its direct business. The company recently raised earnings view for first-quarter fiscal 2021 backed by improved sales trends. Incidentally, the company now envisions earnings between 85 cents and $1.00 per share for the first quarter, up from the earlier-guided band of 55-65 cents. The stock has a Zacks Rank #1 and a VGM Score of A. This specialty retailer of women’s intimate and other apparel, beauty, and personal care products has a trailing four-quarter earnings surprise of 479.7%, on average. It has a long-term earnings growth rate of 13%. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates an improvement of 15.9% and 39.6%, respectively, from the year-ago period.
Investors can also count on Abercrombie & Fitch Co. ANF. The company has been trending up the charts, given its investments in omni-channel capabilities as well as marketing, data and analytics, and prudent inventory management strategies. Moreover, it has been benefiting from an increased focus on EMEA and APAC regions. Additionally, the company is gaining from strong digital sales, up 34% year over year in fourth-quarter fiscal 2020. This along with store-optimization plans is likely to act as a catalyst in the near term. The stock has a Zacks Rank #1 and a VGM Score of B. This specialty retailer has a trailing four-quarter earnings surprise of 404.9%, on average. It has a long-term earnings growth rate of 18%. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests growth of 11.4% and 286.3%, respectively, from the year-ago period.
You may invest in Boot Barn Holdings, Inc. BOOT, which has a Zacks Rank #2 and a VGM Score of A. 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. Impressively, the company has a trailing four-quarter earnings surprise of 23.1%, on average. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings indicates growth of 2.1% and 3.2%, respectively, from the prior-year period.
Tapestry, Inc. TPR is also a solid bet. This provider of luxury accessories and branded lifestyle products is poised to benefit from its Acceleration Program aimed at transforming into a leaner and more responsive organization as well as building significant data and analytics capabilities with focus on enhancing digital and omnichannel capabilities. Notably, the company’s compelling pricing strategy, smaller format locations and cost-effective global sourcing model have been contributing to store productivity. These strategies should help drive sales and margins. Impressively, Tapestry has a trailing four-quarter earnings surprise of 39.5%, on average. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 10% and a VGM Score of B. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests growth of 9.6% and 162.9%, respectively, from the prior-year period.
The Buckle, Inc. BKE is worth betting on. The company has managed to deliver monthly sales increase despite a tough retail landscape. Markedly, net sales for five-week period ended Apr 3, 2021 soared 240.2% to $139.4 million from the year-ago period, when sales were hit by pandemic-induced store closures. It has been witnessing strength in the online business amid the pandemic. Markedly, online sales surged 81.5% in fourth-quarter fiscal 2020. Additionally, momentum in the youth business owing to evolution of the Mini Me assortment appears encouraging. Also, the company’s women’s and men’s merchandise categories have been performing well. This apparel, footwear and accessories retailer has witnessed a positive earnings surprise in the last reported quarter. The stock currently has a Zacks Rank #2 and a VGM Score of A. Moreover, the Zacks Consensus Estimate for its current financial year sales and earnings suggests improvement of 8.3% and 3.4%, respectively, from the year-ago period.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report
Buckle, Inc. The (BKE) : Free Stock Analysis Report
L Brands, Inc. (LB) : Free Stock Analysis Report
Tapestry, Inc. (TPR) : Free Stock Analysis Report
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