Holiday Shopping: Top 9 Retail Stocks with Encouraging Profitability Trends
(Article by Becca Lipman. List compiled by Eben Esterhuizen, CFA. Data sourced from Fidelity.)
If you start seeing Santa Claus in window displays before you've even stocked up on Halloween candy, don't worry. You haven't overslept.
This year, Christmas is coming early to a store near you. In fact, you may have noticed that holiday cheer has been coming earlier every year.
USA Today reports: "More than 37% of shoppers — and 42% of women — plan to do some holiday shopping by Halloween, reports an NRF consumer survey. Retailers are happy to oblige as they chase the estimated $450 billion of holiday spending."
So which retail chains have already jumped the gun? Costco started rolling out their red and green on September 1st, while Home Depot is scheduled for September 19th, Kmart and Sears for September 25th, and Wallmart and J.C Penny by month's end.
You can also buy an inflatable snowman or two at Lowe's starting October 1st. And you could have been stocking up on fake mistletoe from A.C Moore as far back as August!
If you're interested in trading on the trend we list nine (one for each reindeer) retail companies below that have had encouraging profitability trends during the most recent quarter, while simultaneously reducing leverage in their capital structure.
Is this a signal of more good news to come during the 2011 holiday season?
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1. V.F. Corporation (VFC): Designs and manufactures, or sources from independent contractors various apparel and footwear products primarily in the United States and Europe. MRQ net profit margin at 7.03% vs. 6.95% y/y. MRQ sales/assets at 0.271 vs. 0.252 y/y. MRQ assets/equity at 1.593 vs. 1.733 y/y.
2. Quiksilver Inc. (ZQK): Designs, produces, and distributes branded apparel, footwear, accessories, and related products. MRQ net profit margin at 2.07% vs. 1.88% y/y. MRQ sales/assets at 0.291 vs. 0.263 y/y. MRQ assets/equity at 3.206 vs. 3.517 y/y.
3. Shuffle Master Inc. (SHFL): Develops, manufactures, and markets technology and entertainment-based products for the gaming industry worldwide. MRQ net profit margin at 15.65% vs. 11.33% y/y. MRQ sales/assets at 0.176 vs. 0.168 y/y. MRQ assets/equity at 1.465 vs. 1.826 y/y.
4. JAKKS Pacific, Inc. (JAKK): Designs, produces, markets, and distributes toys and consumer products worldwide. MRQ net profit margin at 3.21% vs. 2.42% y/y. MRQ sales/assets at 0.215 vs. 0.205 y/y. MRQ assets/equity at 1.528 vs. 1.619 y/y.
5. Nordstrom Inc. (JWN): Nordstrom, Inc., a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States. MRQ net profit margin at 6.23% vs. 5.81% y/y. MRQ sales/assets at 0.363 vs. 0.345 y/y. MRQ assets/equity at 3.862 vs. 4.031 y/y.
6. Ross Stores Inc. (ROST): Operates off-price retail apparel and home accessories stores under the Ross Dress for Less and dd's DISCOUNTS brand names in the United States. MRQ net profit margin at 7.1% vs. 6.76% y/y. MRQ sales/assets at 0.684 vs. 0.671 y/y. MRQ assets/equity at 2.143 vs. 2.268 y/y.
7. Abercrombie & Fitch Co. (ANF): Operates as a specialty retailer of casual apparel for men, women, and kids. MRQ net profit margin at 3.49% vs. 2.61% y/y. MRQ sales/assets at 0.312 vs. 0.261 y/y. MRQ assets/equity at 1.547 vs. 1.57 y/y.
8. Jos. A Bank Clothiers Inc. (JOSB): Design, retails, and direct-markets men's tailored and casual clothing and accessories. MRQ net profit margin at 8.91% vs. 8.75% y/y. MRQ sales/assets at 0.324 vs. 0.321 y/y. MRQ assets/equity at 1.356 vs. 1.378 y/y.
9. Destination Maternity Corporation (DEST): Engages in the design and retail of maternity apparel. MRQ net profit margin at 6.45% vs. 6.09% y/y. MRQ sales/assets at 0.728 vs. 0.708 y/y. MRQ assets/equity at 2.194 vs. 3.015 y/y.