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New $600 stimulus checks from Uncle Sam fuel January spending boom at retailers

Brian Sozzi
·Editor-at-Large
·6 min read

Armed with their new $600 stimulus checks, consumers appear to be back in the shopping mood this month after spending cautiously this past holiday season.

Big-name retailers such as Lululemon, Crocs, Zumiez and others have come out this week with much better than expected fourth quarter results. More importantly, executives at these companies — who are presenting at the ICR Consumer Conference 2021 this week — have voiced optimism on trends so far in January.

“We believe a number of factors are at play, including some benefit from stimulus beginning to take hold,” says Jefferies retail analyst Janine Stichter.

Seeing anything upbeat in retail right now is a shock.

Consumer confidence has weakened in recent months as consumers worry about their job prospects with the pandemic raging on. The U.S. economy hemorrhaged 140,000 jobs in December, the U.S. Department of Labor reported last week, worse than most economist prediction on Wall Street. It marked a sharp reversal from the upwardly 336,000 jobs created in November. The decline represented the first time since April that job growth was a negative. Private payrolls declined by 93,000.

Despite the numerical doom and gloom (excluding the influence on consumer sentiment from the Capitol Hill insurrection) here are a few retailers that have surprised Wall Street thus far in 2021.

Lululemon

Those people securing a fresh $600 stimulus check probably aren’t buying five pairs of new $120 yoga pants from Lululemon (LULU), but the apparel retailer still had positive things to say this week on its business as wealthier households bask in the glory of a bullish stock market.

The company said its fourth quarter sales will be at the high-end of its mid- to high-teens [percentage} guidance. Earnings are also seen above the company’s mid-single digit guidance.

Photo by: STRF/STAR MAX/IPx 2020 8/14/20 Big Businesses continue to thrive in New York City during the Phase 4 reopening. Smaller retail shops and restaurants have not been as fortunate.
Photo by: STRF/STAR MAX/IPx 2020 8/14/20 Big Businesses continue to thrive in New York City during the Phase 4 reopening. Smaller retail shops and restaurants have not been as fortunate.

“We’re pleased with the momentum over the holiday period as our investments in lululemon and MIRROR allowed us to connect with guests both physically and digitally. We remain confident about our opportunities in 2021 and committed to our Power of Three growth plan,” said Lululemon CEO Calvin McDonald.

Zumiez

Skater and surfwear inspired apparel for young adults appears to be in high demand to kick off the year judging by Zumiez (ZUMZ) commentary.

And that clearly has Zumiez CEO Rick Brooks fired up, as evidenced by an extra long statement to investors on a press release detailing sales trends.

“We continue to be impressed with our team’s ability to perform well under very difficult retail conditions. Similar to the trends we experienced around Black Friday in November, sales in the off-peak weeks in December were very strong, while the usual peak weeks that are heavily reliant on in-store sales were more challenged with less traffic and various COVID-19 restrictions. For the 10-week period, our stores were open for approximately 95% of the potential operating days with our most significant closures in Europe and Eastern Canada. In light of these headwinds, we are pleased that comparable sales were up 1.3% in December and have been up double digits thus far in January signaling a strong final month of the year. Given our momentum, solid financial position, and relatively strong performance through these highly challenging times, we remain confident in our ability to continue to gain share and drive long-term shareholder value,” Brooks said.

Zumiez reported that comparable store sales for the 10-week period ended Jan. 9 increased a solid 1.7%.

Genesco

Shoe retailer Genesco (GCO) didn’t have the most blistering holiday season.

Same-store sales for the eight-week period ended Dec. 26 fell 14%, paced by 4% drops at Journeys and a 34% plunge at Johnston & Murphy Group. Sales at the Schuh segment rose 29%.

But similar to the other names mentioned here, Genesco struck an upbeat tone on demand in January.

“Overall, our performance this holiday selling season was very encouraging given the backdrop of the COVID-19 pandemic with sales coming in above our expectations. Journeys once again led the way with strong full-price selling, and we were pleased that Schuh delivered better than expected results especially as the business continues to face significant mandated store closures. Fiscal January is off to a strong start with comps turning nicely positive, providing us with optimism for a solid finish to Fiscal 2021,” said Genesco CEO Mimi Vaughn.

Boot Barn

Looks like a few stimulus dollars have gone to buying a new pair of cowboy or cowgirl boots.

For the quarter ended Dec. 26, Boot Barn (BOOT) reported this week same-store sales rose 4.6%. Online sales increased 16.3%.

The company says it’s seeing a strong start to the current quarter.

“We are very pleased with our third quarter performance as results exceeded our expectations across the board. Our top-line was highlighted by mid-single digit same store sales growth as retail store comps returned to positive territory despite ongoing headwinds from COVID-19, and our e-commerce business remained strong. The combination of our innovative merchandise strategies, solid supply chain management and disciplined promotional activity fueled strong full price selling and a meaningful improvement in merchandise margin. These dynamics contributed to higher profitability year-over-year, with EPS growing more than 20% when excluding the impact of tax benefits in both years. With the fourth quarter off to a strong start, we believe we are well positioned for a solid finish to the current fiscal year,” said Boot Barn CEO Jim Conroy.

Bed Bath & Beyond

The home goods retailer had a mixed performance in its most recent quarter reported a week ago. Sales and profits missed Wall Street estimates, putting pressure on the stock.

But Bed Bath & Beyond (BBBY) CEO Mark Tritton told Yahoo Finance Live that January is off to a solid start.

“We’re seeing good early signs in January,” Tritton said, adding that guidance for the current quarter of unchanged year-over-year sales and gross margins may prove conservative. Upside to guidance is possible if consumers spend their new stimulus checks on home goods, Tritton hinted.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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