The retail sector has been one of the worst victims of the pandemic, clothing and clothing sales being hit hard as most people have stayed at home and spent more on their basic necessities . However, the clothing market has started to show signs of recovery as the economy reopens and restrictions are slowly lifted.
Finally, it looks like clothing sales are picking up as restrictions ease and people prepare to go on vacation. In addition, back to school is approaching and sales are expected to increase.
Rebound in clothing sales
After suffering for months, the clothing market is finally showing signs of recovery with a recovery in sales. Although retail sales unexpectedly declined in May, clothing sales put on an impressive show. According to the latest Commerce Department report, clothing and clothing accessories store sales climbed 200.3 percent in May year-on-year. On a month-to-month basis, sales were up 3% in May.
Sales hit a low last year as the pandemic forced retailers to close their stores. While e-commerce helped the retail industry somewhat, people were spending mostly on essentials, which saw clothing sales continue to decline. However, things have started to change since the start of the year, thanks to the new stimulus round which has given people more purchasing power.
Clothing sales poised to grow
The massive vaccination campaign allowed people to regain their self-confidence to leave their homes. This has led the government to relax the restrictions and people are now planning vacations and going back. In addition, schools are reopening and parents are more confident to send their children to school this time around. This could turn out to be a great back to school yet again for clothing retailers.
Back-to-school clothing sales are expected to jump 78.2% year-over-year, according to the latest SpendingPulse Mastercard. The start of the school year is generally considered to be the period between July 15 and September 6.
This period set up a no-show last year as schools remained closed due to the pandemic, severely affecting not only clothing but the entire retail industry. Like the holiday season, back to school is considered an important sales period for retailers. Back to school is expected to increase overall retail sales by 5.5% this year from 2020 and 6.7% from 2019.
The industry will further benefit in the coming days as restrictions are further relaxed. It will give people more confidence when they leave their homes. Also, after a year of virtually no outdoor activity, many are likely to be planning trips and vacations, which will require them to buy clothes.
Given this scenario, it would be prudent to invest in these five clothing stocks. Each of the actions has a Zacks Rank # 1 (Strong Buy) or 2 (Buy). You can see the full list of today’s Zacks # 1 Rank stocks here.
Abercrombie & Fitch Company ANF operates as a specialist retailer of high-end casual clothing for men, women and children through a network of approximately 850 stores in North America, Europe, Asia and the Middle East.
The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 88.1% in the past 30 days. The company sports a Zacks Rank # 1.
Loop, Inc. The BKE markets a wide selection of private label brands and casual wear, including denim, other casual bottoms, tops, sportswear, outerwear, accessories and footwear.
The company’s expected profit growth rate for the current year is 41%. Zacks’ consensus estimate for current year earnings has improved 25% over the past 30 days. The company sports a Zacks Rank # 1.
Brands L, Inc. LB has grown from a specialty apparel retailer to a segment leader focused on women’s intimate and other clothing, personal care, beauty and home fragrance products.
The company’s expected profit growth rate for the current year is 67.3%. Zacks’ consensus estimate for current year earnings has improved 6.6% in the past 30 days. L Brands has a Zacks Rank # 2.
Urban Outfitters, Inc. URBN is a specialty lifestyle retailer offering fashionable clothing and accessories, footwear, home decor and giftware.
The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 29% over the past 30 days. Urban Outfitters wears Zacks Rank # 1
The Children’s Place, Inc. PLCE sells clothing, shoes, accessories and other items for children; and designs, contracts to manufacture and sells merchandise under the brand names “The Children’s Place”, “Place”, “Baby Place” and “Gymboree”.
The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 58.2% in the past 30 days. The Children’s Place wears a Zacks Rank # 1.
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