U.S. retail sales defied expectations in August, posting a modest 0.1% rise from July. While declines in auto sales and gasoline receipts weighed on overall performance, a rise in spending on online shopping, sporting goods, health and personal care, and garden stores provided a much-needed boost, highlighting consumer resilience.
This modest growth in retail sales signals that the economy is holding steady despite the underlying inflationary pressures. On a year-over-year basis, retail sales in August saw a commendable 2.1% increase. Retailers such as Boot Barn Holdings, Inc. BOOT, Abercrombie & Fitch Co. ANF, Sprouts Farmers Market, Inc. SFM and Burlington Stores, Inc. BURL are well-positioned to benefit from this uptick in consumer activity.
Steady wage gains have played a pivotal role in sustaining consumer spending momentum. With inflation showing signs of easing, purchasing power is gradually improving, fueling further spending in the coming months. Meanwhile, economists are anticipating a measured response to the rate cut from the Federal Reserve, which could lower borrowing costs, supporting both consumer spending and business investment.
Breaking Down Retail Sales Numbers
Building material, garden equipment & supplies dealers, along with health & personal care stores, saw month-on-month increases of 0.1% and 0.7%, respectively. Sales at sporting goods, hobbies, musical instruments & bookstores rose by 0.3%, while miscellaneous stores experienced a 1.7% increase. Non-store retailers, primarily online, reported a 1.4% rise.
Conversely, clothing & accessories stores saw a 0.7% decline in sales, and general merchandise stores experienced a 0.3% drop. Sales at food services & drinking places remained unchanged.
Motor vehicle & parts dealers recorded a 0.1% decrease in sales. Furniture & home furnishing stores saw a 0.7% drop, while electronics & appliance stores experienced a 1.1% decline. Sales at food and beverage stores fell by 0.7%, and receipts at gasoline stations decreased by 1.2%.
Past-Year Stock Price Performance of BOOT, ANF, SFM & BURL
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4 Top Retail Stocks:
Boot Barn Holdings: Store Expansion & Customer Engagement
Boot Barn Holdings, a leading retailer specializing in western and work-related footwear, apparel and accessories for all ages, presents a compelling investment opportunity. The company is well-positioned for sustained growth, thanks to its expanding store network, growing and loyal customer base, and focus on high-margin exclusive brands. Strategic investments in new store openings are set to enhance market presence and drive incremental revenues. Boot Barn Holdings’ commitment to bolstering e-commerce and omnichannel capabilities is likely to boost online sales and improve customer engagement.
The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and earnings per share (EPS) suggests growth of 11.6% and 10.7%, respectively, from the year-ago period. BOOT, which sports a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 7.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Abercrombie & Fitch: Brand Visibility & Global Expansion
Abercrombie & Fitch is an appealing investment opportunity, distinguished by its effective integration of digital and physical retail channels. This seamless approach enhances the shopping experience, leading to increased customer satisfaction and loyalty. The company’s strategic marketing efforts, including targeted campaigns in key markets, have elevated brand visibility and attracted new customers. By introducing innovative product lines that cater to specific customer needs, Abercrombie & Fitch has expanded its brand appeal. Its regional focus on the Americas, EMEA (Europe, the Middle East, and Africa) and APAC (Asia-Pacific) provides a strong foundation for continued global growth.
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 EPS suggests growth of 13.1% and 63.4% from the year-ago period. ANF sports a Zacks Rank #1.
Sprouts Farmers, navigating a fragmented grocery sector, presents a compelling investment opportunity. The company employs a multifaceted strategy to broaden its customer base and meet shifting consumer preferences. By focusing on product innovation, targeted marketing and competitive pricing, Sprouts Farmers effectively aligns its offerings with diverse customer needs. 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.
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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 (Buy) company has a trailing four-quarter earnings surprise of 18.4%, on average.
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