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Consumer Confidence Down? Here Are 4 Retail Stocks to Invest in Now
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Consumer Confidence, a crucial gauge of economic health, saw a decline in September. According to the latest data from the Conference Board, the index plummeted to 98.7, a sharp drop from August's upwardly revised figure of 105.6. This marks the steepest decline since August 2021, catching economists off guard, who had anticipated a more modest figure of around 104.
The Present Situation Index, which evaluates consumer views on current business and labor market conditions, also fell by 10.3 points to 124.3. While the job market remains resilient, concerns about fewer job openings, reduced work hours and slower payroll growth have dampened consumer expectations for near-term spending. However, major retailers such as Abercrombie & Fitch Co. (ANF - Free Report) , Sprouts Farmers Market, Inc. (SFM - Free Report) , Chewy, Inc. (CHWY - Free Report) and Burlington Stores, Inc. (BURL - Free Report) are adapting to these shifting consumer behaviors.
To combat growing economic uncertainty, the Federal Reserve recently slashed interest rates by 50 basis points to a range of 4.75% to 5%. This marks the first rate cut since 2020 and signals the Fed’s commitment to supporting economic stability and averting a downturn.
Lower interest rates are expected to stimulate consumer spending by reducing borrowing costs, particularly for high-ticket items like appliances and electronics. Although the immediate impact may be limited, retailers stand to benefit as consumer confidence gradually rebounds and spending levels recover.
Despite ongoing challenges, retailers are banking on a strong holiday season. According to Deloitte, holiday retail sales are projected to increase between 2.3% and 3.3% year over year, totaling $1.58 trillion to $1.59 trillion during the November to January period. E-commerce sales are anticipated to rise by 7% to 9%, reaching between $289 billion and $294 billion.
Past-Year Stock Price Performance of ANF, SFM, CHWY & BURL
Image Source: Zacks Investment Research
4 Prominent Retail Stocks
Abercrombie & Fitch: Brand Visibility & Global Expansion
Abercrombie & Fitch stands out as a strong investment choice. The company excels in integrating digital and physical retail channels, offering a seamless shopping experience and driving higher customer satisfaction and loyalty. Strategic marketing initiatives, particularly targeted campaigns in key markets, have been effective in boosting brand visibility and customer acquisition. The introduction of innovative product lines meets specific customer needs and broadens the brand's appeal. Abercrombie & Fitch’s regional operating model, with a focus on the Americas, the EMEA (Europe, the Middle East and Africa) and the APAC (Asia-Pacific), provides a solid foundation for global expansion.
This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids has a trailing four-quarter earnings surprise of 28%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 13.1% and 63.4% from the year-ago period. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and EPS suggests growth of 9.6% and 18.7%, respectively, from the year-ago reported figure. SFM, which sports a Zacks Rank #1, has a trailing four-quarter earnings surprise of 12%, on average.
Image Source: Zacks Investment Research
Chewy: Autoship Growth & Veterinary Expansion
Chewy is a notable player in the online pet retail market. The company’s Autoship program, central to its revenue strategy, drives significant sales through its subscription-based model, focusing on essential consumables and healthcare products. Chewy’s premium product offerings and growth in Net Sales Per Active Customer reflect strong customer loyalty and repeat purchases. The expansion into veterinary services through new clinics enhances customer acquisition and retention. The growing Sponsored Ads business is on track to become a significant revenue stream.
The Zacks Consensus Estimate for Chewy’s current fiscal sales and EPS suggests growth of 5.7% and 65.2%, respectively, from the year-ago reported figure. This Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 50.9%, on average.
Image Source: Zacks Investment Research
Burlington: Merchandising Enhancements & Store Productivity
Burlington Stores is a nationally recognized off-price retailer. The company has demonstrated a strong ability to adapt to consumer trends, which gives it a competitive edge in the retail landscape. By staying in tune with customer preferences and adjusting its product offerings, Burlington Stores is well-positioned to capture additional market share. The company has balanced promotions with regular price sales, appealing to budget-conscious shoppers while protecting margins. Its strategic initiatives, including enhancing merchandising capabilities and optimizing store operations, have supported revenue growth. With targeted store openings, relocations and real-time inventory management, Burlington has seized opportunities and improved store productivity.
The Zacks Consensus Estimate for Burlington Stores’ current financial-year sales and EPS suggests growth of 10.1% and 30.5%, respectively, from the year-ago reported figures. This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 18.4%, on average.
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Consumer Confidence Down? Here Are 4 Retail Stocks to Invest in Now
Consumer Confidence, a crucial gauge of economic health, saw a decline in September. According to the latest data from the Conference Board, the index plummeted to 98.7, a sharp drop from August's upwardly revised figure of 105.6. This marks the steepest decline since August 2021, catching economists off guard, who had anticipated a more modest figure of around 104.
The Present Situation Index, which evaluates consumer views on current business and labor market conditions, also fell by 10.3 points to 124.3. While the job market remains resilient, concerns about fewer job openings, reduced work hours and slower payroll growth have dampened consumer expectations for near-term spending. However, major retailers such as Abercrombie & Fitch Co. (ANF - Free Report) , Sprouts Farmers Market, Inc. (SFM - Free Report) , Chewy, Inc. (CHWY - Free Report) and Burlington Stores, Inc. (BURL - Free Report) are adapting to these shifting consumer behaviors.
To combat growing economic uncertainty, the Federal Reserve recently slashed interest rates by 50 basis points to a range of 4.75% to 5%. This marks the first rate cut since 2020 and signals the Fed’s commitment to supporting economic stability and averting a downturn.
Lower interest rates are expected to stimulate consumer spending by reducing borrowing costs, particularly for high-ticket items like appliances and electronics. Although the immediate impact may be limited, retailers stand to benefit as consumer confidence gradually rebounds and spending levels recover.
Despite ongoing challenges, retailers are banking on a strong holiday season. According to Deloitte, holiday retail sales are projected to increase between 2.3% and 3.3% year over year, totaling $1.58 trillion to $1.59 trillion during the November to January period. E-commerce sales are anticipated to rise by 7% to 9%, reaching between $289 billion and $294 billion.
Past-Year Stock Price Performance of ANF, SFM, CHWY & BURL
Image Source: Zacks Investment Research
4 Prominent Retail Stocks
Abercrombie & Fitch: Brand Visibility & Global Expansion
Abercrombie & Fitch stands out as a strong investment choice. The company excels in integrating digital and physical retail channels, offering a seamless shopping experience and driving higher customer satisfaction and loyalty. Strategic marketing initiatives, particularly targeted campaigns in key markets, have been effective in boosting brand visibility and customer acquisition. The introduction of innovative product lines meets specific customer needs and broadens the brand's appeal. Abercrombie & Fitch’s regional operating model, with a focus on the Americas, the EMEA (Europe, the Middle East and Africa) and the APAC (Asia-Pacific), provides a solid foundation for global expansion.
This leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids has a trailing four-quarter earnings surprise of 28%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 13.1% and 63.4% from the year-ago period. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
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.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and EPS suggests growth of 9.6% and 18.7%, respectively, from the year-ago reported figure. SFM, which sports a Zacks Rank #1, has a trailing four-quarter earnings surprise of 12%, on average.
Image Source: Zacks Investment Research
Chewy: Autoship Growth & Veterinary Expansion
Chewy is a notable player in the online pet retail market. The company’s Autoship program, central to its revenue strategy, drives significant sales through its subscription-based model, focusing on essential consumables and healthcare products. Chewy’s premium product offerings and growth in Net Sales Per Active Customer reflect strong customer loyalty and repeat purchases. The expansion into veterinary services through new clinics enhances customer acquisition and retention. The growing Sponsored Ads business is on track to become a significant revenue stream.
The Zacks Consensus Estimate for Chewy’s current fiscal sales and EPS suggests growth of 5.7% and 65.2%, respectively, from the year-ago reported figure. This Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 50.9%, on average.
Image Source: Zacks Investment Research
Burlington: Merchandising Enhancements & Store Productivity
Burlington Stores is a nationally recognized off-price retailer. The company has demonstrated a strong ability to adapt to consumer trends, which gives it a competitive edge in the retail landscape. By staying in tune with customer preferences and adjusting its product offerings, Burlington Stores is well-positioned to capture additional market share. The company has balanced promotions with regular price sales, appealing to budget-conscious shoppers while protecting margins. Its strategic initiatives, including enhancing merchandising capabilities and optimizing store operations, have supported revenue growth. With targeted store openings, relocations and real-time inventory management, Burlington has seized opportunities and improved store productivity.
The Zacks Consensus Estimate for Burlington Stores’ current financial-year sales and EPS suggests growth of 10.1% and 30.5%, respectively, from the year-ago reported figures. This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 18.4%, on average.
Image Source: Zacks Investment Research