The odds favor a broad mix of retail segments to hit pay dirt
during the holiday season's buying spree as shoppers spend more
freely on clothing, footwear and sporting goods.
If analysts' forecasts are on the money, top-performing
retailers of all stripes such as sporting goods chainDick's
Sporting Goods (
), athletic footwear retailerFoot Locker (
), women's clothierFrancesca's Holdings (
) and giant department store operatorMacy's (
) should keep up their winning streak this Christmas period, with
double-digit fourth-quarter earnings forecast by analysts polled
by Thomson Reuters.
The recreation segment, which includes sporting goods stores,
and teen apparel chains should see the biggest gain, with a 43%
jump estimated for both segments, followed by footwear at 30% and
apparel at 21%, says Ken Perkins, president of Retail Metrics.
Analysts forecast an 11.2% gain for the industry in the fourth
quarter, he says, which for most chains runs from November
Sporting goods stores, apparel chains and shoe stores are also
among the segments likely to outpace the industry's
fourth-quarter same-store sales growth, says Michael Niemira,
chief economist at the International Council of Shopping
He expects shoe stores to see a 5% jump in same-store sales
vs. a year earlier, and sporting goods retailers to see a 4.5%
gain compared with a 2.5% rise for the industry.
"Overall, the performance is likely to be healthy, but quite
uneven," said Niemira. "There are pockets of strength by
retailer. Those retailers that have been aggressively catering to
the consumer's needs for freshness, financing alternatives and
for good value will tend to garner a bigger market share this
Take Dick's, which Thomson Reuters analysts expect will see a
41% rise in fourth-quarter earnings.
The retailer features a wide variety of hot brands likeNike (
) andUnder Armour (UA), and it offers merchandise that's well
differentiated from what you find at other stores, says Brian
Sozzi, chief equities analyst at NBG Productions. That helps lure
customers and enables Dick's to command higher prices.
Perkins says the sporting goods retail sector is in a "sweet
spot" in a "sports-crazed" nation.
And specialty retailers in the segment such as Dick's have
done a good job of marketing apparel and related, logo-branded
merchandise, which range from mugs and sweat shirts to pillow
"Boys love this stuff for Christmas," he said.
Apparel is a traditionally strong holiday gift category, which
watchers expect will sell well this holiday. Niemira says
specialty apparel stores consistently have been good performers,
with an average 3% rise in same-store sales for the group this
year, a trend he sees continuing through the fourth quarter.
He calls that a "pretty healthy gain" for the segment.
Apparel chains should fare well this holiday and should
benefit from lower input costs with the price of cotton down
roughly 15% from last year, adds Keith Jelinek, director with
consulting firm AlixPartners.
Lower cotton costs should help clothing stores run aggressive
promotions without hurting margins, he says.
Women's clothing and accessories boutique operator Francesca's
is among those retailers that should stay on the fast track
through the holiday. It rang up a 71% jump in third-quarter
earnings, and analysts see a 40% gain in the fourth quarter.
Francesca's is very much a niche player, says Perkins, with a
unique and trendy selection.
Yoga and workout clothes retailerLululemon Athletica (LULU)
should also be a hot spot for holiday gifts, say followers.
Analysts expect the upscale chain to see a 47% jump in
fourth-quarter earnings following a 44% pop in the third quarter
reported on Dec. 6.
"They're selling a very high-quality product that they're
known for," said Sozzi. "Over the past two quarters, that product
has gotten that much better with more technical aspects, better
fabric and brighter colors, giving the consumer another reason to
shop in the store and pay what is a very high competing price
Off-price retailersTJX (TJX), parent of T.J. Maxx, Home Goods
and Marshalls, andRoss Stores (ROST) are well positioned for the
holidays, with national brands at reasonable prices, says
Perkins. Analysts see a 22% fourth-quarter earnings gain for Ross
and a 23% rise for TJX.
Teen clothing retailersAmerican Eagle Outfitters (AEO)
andRue21 (RUE) should continue the momentum they had for
back-to-school into the Christmas holiday. Both offer prices that
are more affordable for the middle-income consumer, says Perkins,
and they're popular spots for gift cards.
Analysts expect American Eagle's fourth-quarter earnings to
soar 60% and Rue21 to see a 21% rise.
Footwear retailers such asFoot Locker (
) and off-price retailerDSW (DSW) are shoe-ins for a cheery
Sozzi says athletic footwear retailers are benefiting from
strong product innovation from brands like Nike. And with
sneakers a hot fashion item featuring bright colors, teens are
making statements through their sneakers, Sozzi says.
Analysts expect footwear retailers to be big winners in the
fourth quarter, with a 5% pop in same-store sales for the
segment, as teens go in big for sneakers and women step up their
boot buying, says Jharonne Martis, Thomson Reuters' director of
Department stores should be another hot spot for holiday gift
buying. Thomson Reuters analysts expect the department store
segment to see a solid 3.1% increase in fourth-quarter comps,
Macy's will continue to be among the group's top performers,
with an expected 4% rise in fourth-quarter same-store sales,
Macy's has an attractive merchandise mix, says Perkins, and
has done a good job integrating its online operation with its
brick-and mortar stores.
Dollar stores, which include retailers such asDollar Tree
(DLTR),Family Dollar Stores (FDO) andDollar General (DG), top
Niemira's list of strong fourth-quarter performers, with an
estimated 5.5% gain in same-store sales.
Furniture and home furnishing stores such asEthan Allen (ETH)
should also see a strong showing, with a 5.5% jump in
fourth-quarter comps, Niemira says.
This group, says Martis, is benefiting from the improvement in
Shoppers took advantage of earlier-than-ever store openings
and sweet deals on Thanksgiving weekend. Total spending for the
four-day period rose 13% from a year earlier to $59.1 billion,
according to the National Retail Federation.
Overall, the consumer mood is generally one of "cautious
optimism," said Perkins. Consumer confidence is near a five-year
high, the housing market is improving and the unemployment rate
is trickling down.
Niemira expects November-December same-store sales to increase
3% from last year, slightly less than last year's 3.3% rise.
"If things pan out and there's no implosion in sales resulting
from the fiscal cliff talks, retailers should have a good holiday
season, with total sales up 3% to 3.5%," added Perkins.