UPDATE 1-Investors Watch Retail Stocks As US Holiday Shopping Rolls Out

(Update prices, add a chart)

By Caroline Valetkevitch

NEW YORK, Nov. 24 (Reuters) – Investors are focusing on a number of trending retailer stocks as the holiday shopping season in the United States shifts into high gear this week, weighing the potential for problems in the supply chain compared to the expected high demand from consumers.

The day after the Thanksgiving holiday in the United States, Black Friday https://www.reuters.com/video/watch/idPE3S?now=true, for years unofficially marked the start of the holiday shopping season and one of the busiest shopping days of the year.

But the ongoing coronavirus pandemic and its effects on supplies likely scared buyers away early, as evidenced by a recent Commerce Department report showing US retail sales increased in October.

“We are in a very different place now and for two years. Christmas is a four month season https://www.reuters.com/business/retail-consumer/with-us-inventories-tight-black- Friday-drags -through-November-2021-11-23, starting in October, ”said Phil Orlando, chief equity strategist and head of the client portfolio management team at Federated Hermes in New York.

Among other trends, the average Black Friday promotional discount https://www.reuters.com/business/retail-consumer/santa-claus-is-coming-town-what-cost-walmart-target-2021-11-15 is lower than in previous years, according to data compiled by Refinitiv and StyleSage Co, a data analytics platform, suggesting consumers may not be seeing the great deals they’ve seen before.

But analysts have become more optimistic about the holiday shopping season, according to data polled by Refinitiv, which noted that discounters, furniture and home improvement companies are expected to experience one of the strongest sales growth in the world. comparable stores.

Many retailers have outperformed the broader market this year. An S&P retail exchange-traded fund is up 54% since Dec. 31, compared to a gain of around 25% for the S&P 500 since the start of the year.

Refinitiv highlighted a number of companies facing “tough comparisons” in the fourth quarter compared to a year ago when sales were strong, but still have bullish forecasts for this quarter, including Crocs Inc, Williams -Sonoma, Lowe’s Cos, Home Depot, Lululemon Athletica and Target.

“Last year they took it out of the park, and you still see some solid numbers, which suggests that the strength and demand for the products is holding up very well,” said Jharonne Martis, director of consumer research at Refinitiv.

Among the retailers with the best year-over-year gains are Bath & Body Works, Tractor Supply Autozone, and Etsy.

Recent retailer earnings reports cited supply disruption issues and strategists say inventory levels could be an issue for some retailers this shopping season.

This week, Gap Inc. lowered its annual forecast due to supply chain disruptions including plant closures, and its shares fell about 23% on Wednesday.

Walmart Inc raised its annual sales and profit guidance last week, but disruptions in the global supply chain hit its margins in the third quarter.

Online spending will be strong again this holiday season, Refinitiv analysis also showed, so all eyes will be on Amazon.com.

“Online is going to rule the day,” said Orlando, and he said that overall, the companies that are likely to do better this season are the ones that have been able to find a way around the supply bottlenecks, like Amazon, and maybe Target, Walmart, and Costco.

Stocks of department stores that typically attract heavier traffic during the holidays will also be closely watched, including Macy’s, Kohl’s and Nordstrom, as well as companies with consumer favorite brands, such as Apple.

Macy’s reported last week that it was well stocked for the holiday season.

(Reporting by Caroline Valetkevitch; Editing by Alden Bentley and Nick Zieminski)

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