Most top retail stocks have had a rough year. Especially those who are in the business of cosmetics, fashion, and apparel. When the pandemic struck, many retail stores were forced to close on lockdown orders. Unfortunately, this caused many retail stores to file for bankruptcy. This also caused a drop in the entire retail sector in the stock market. However, with the hopeful coronavirus vaccine news recently and the upcoming holiday seasons, people are beginning to shop more. The stock market today seems to be starting to realize that, judging by the surge in many of the best retail stocks to watch this week.
For example, prominent retail companies such as Gap (GPS Stock Report) and Abercrombie & Fitch (ANF Stock Report) are showing gains of over 10% this month. With the advent of the holiday seasons, most major retail companies have established and fortified their e-commerce services. The industry appears to be eager for this holiday season to make up for lost revenue earlier this year. Evidently, Black Friday sales are quickly turning into a month-long affair this year. Shoppers who are stuck at home with more disposable income are most likely to spend more in the coming weeks.
All this is a much-needed change for the industry which suffered massive losses in the first quarter of the year. Investors looking for top retail stocks to buy are hoping for a strong rebound in retail activities. But the real question here is, will the annual year-end shopping wave be good enough to offset the losses faced by the industry? Your guess is as good as mine. With all this in mind, do you have a list of top retail stocks to watch ahead of the holiday season?
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Coty (COTY Stock Report) is a multinational beauty company based in New York. The company has been around since 1904. Coty develops, manufactures, and markets its products through its subsidiaries. These products include fragrances, cosmetics, skincare, nail care, and retail hair care products. Coty is essentially a titan in the retail industries of beauty and fragrance. The company has three core businesses. These are its consumer beauty, luxury, and skincare divisions.
The company is currently seeing a 39% rise in share price over the last week. This comes after a strong performance reported in its first-quarter fiscal 2021. In it, Coty shows a 24% increase in profit growth year-over-year. It also saw a 17% decrease in fixed costs which amounts to approximately $80 million in savings. This is because the company is undergoing a headcount reduction and orchestrating significant savings from its business services. In light of this, Coty appears to be on track to reduce its fixed cost by another $600 million by the end of its fiscal 2023.
The company has been gaining a lot of attention from investors recently. This is due to its recent purchase of a majority stake in Kylie Cosmetics last Monday. The company aims to expand this massively popular brand globally and into new beauty categories. This is an excellent maneuver by Coty as it positions itself to leverage the immense popularity of the brand. Kylie Cosmetics was launched by TV personality Kylie Jenner in 2015 to a customer base that aspires to look like her. With Coty possibly looking to expand its reach in the international market, things are looking promising for the company. This is why COTY stock is a top retail stock to watch next week.Top Retail Stocks To Watch Before December 2020: L Brands Inc.
L Brands (LB Stock Report) is no newcomer to the world of fashion retail. The company is famous for its key subsidiaries Victoria’s Secret and Bath & Body Works. It is currently on the Fortune 500 list of largest U.S. companies in terms of revenue. With share prices up by 12% over the past 5 trading sessions, LB stocks are back on investors’ radar this week. What could be the reason behind this latest rally?
The company released its third-quarter fiscal last Wednesday. It reported a 472% rise in operating income year-over-year. This is undeniably due to a stellar performance by its subsidiaries across the board. Most notably, company subsidiary Bath & Body Works showed top form this quarter. The bath shop franchise saw year-over-year gains of 55% in total sales and 137% in operating income. Additionally, the company’s other main subsidiary Victoria’s Secret also performed significantly better this quarter. It reported a 42% rise in direct channel growth with a 264% rise in operating income compared to a year earlier.
L Brands recently announced its partnership with Next PLC for its Victoria’s Secret stores in Ireland and the UK. Under the terms of the joint venture, Next PLC will acquire the majority of the assets of Victoria’s Secret U.K. President of L Brands International, Martin Waters, commented “We are pleased to take this next step in our profit improvement plan for Victoria’s Secret. Next’s capabilities and experience in the U.K. market are substantial, and our partnership will provide meaningful growth opportunities for the business.” This play on L Brands’ end has proven to be fruitful thus far. With solid partnerships backing the company’s operation, could LB stock regain investors’ confidence as a top retail stock to buy?Top Retail Stocks To Watch Before December 2020: Nike Inc.
The final spot on this list goes to Nike (NKE Stock Report). The company is a global leader in athletic footwear and apparel. Despite all the chaos of the current pandemic, the company’s share prices are currently up by 30% year-to-date. Initially, Nike’s brick-and-mortar store sales suffered due to coronavirus. The company has since made an impressive recovery.
In its first-quarter fiscal posted in September, the company reports a mere 1% decrease in year-over-year revenue. This is positive news as its reopening of stores and digital acceleration do appear to be mitigating some of the losses from its previous fiscal year. The company also reported a 10% increase in earnings per share compared to a year earlier. This is likely due to the 82% hike in digital revenues and its direct-to-customer service “Nike Direct” seeing a 12% rise in sales. In light of this impressive performance at the halfway point in the year, investors are likely keeping a close watch on Nike. The company will report its second-quarter fiscal next month.
On Thursday, Nike unveiled a new core retail format in the form of Nike Unite. Nike Unite stores are designed to be a “community centerpiece” with the focus of connecting local communities with sports. It plans to open nine stores this year. The array of products being sold will closely reflect the community’s tastes, which means it will vary depending on location. By straying from offering its conventional products available globally, Nike is focusing on localized styles. This could benefit the company as the curated offerings are more likely to attract customers during the holiday season. With all that said, should investors be watching NKE stock closely next week?