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Zacks Industry Outlook Highlights: Macy's, V.F., American Eagle Outfitters, Target and Gap

For Immediate Release

Chicago, IL - March 5, 2018 - Today, Zacks Equity Research discusses the Industry: Retail, Part 2, including Macy's Inc. M , V.F. Corp.VFC , American Eagle Outfitters Inc.AEO , Target Corp.TGT and The Gap Inc.GPS.

Industry: Retail, Part 2

Link: https://www.zacks.com/commentary/151408/retail-transition-brings-opportunities-for-industry-players

The transformation in the retail sector has brought in good news with signs of prosperity emerging since late 2017. The overwhelming holiday season was a clear indicator, which not only justified the growth of the economy but also lifted the outlook of the retail sector. The economy has been gaining from more confident consumers, who are willing to spend, as the labor market remains strong and incomes continue to rise.

This favorable consumer environment raised the hopes of retailers, who are looking to benefit from collaborations, taking more risks and being innovative. Clearly, retailers coming up with new ideas to create a more customer-centric experience are poised to grow in today's market.

The retail trends emerging after the solid holiday bash reveal that consumers will continue to spend throughout 2018. This calls for another eventful year ahead, where consumers will seek more convenience, personalization and speed, and retailers will continue to bring in newer ways to provide a robust customer experience.

The Nation Retail Federation ("NRF") revealed that retail sales for January were as strong as the holiday season backed by an improving economy. Retail sales in January rose 5.4% year over year, following a 5.1% unadjusted year-over-year growth in holiday sales during November and December.

With consumers feeling good about their financial health and consumer spending reflecting steady growth, the NRF predicts retail sales for 2018 to improve between 3.8% and 4.4% from the 2017 level. Notably, retail sales were up 3.9% in 2017 compared with 2016. Further, online and other non-store sales are likely to witness growth of 10-12% as the definition of retailing continues to evolve.

That said, let's take a look at the trends that are expected to rule the retail sector in 2018.

Retail Trends This Year

The retail sector will witness intense competition among store formats, channels and players. Consumers will gain from a slate of increasing options as retailers continue to reform their businesses with both online and in-store operations.

Redefining Retail Strategies: Despite the rise of omni-channel and e-commerce, the brick-and-mortar retailing concept still holds value. Time and again it has been proven that it is impossible to eliminate physical stores and human assistance in shopping. However, with the rise of digital commerce there arises a need to re-think and re-define the role of workforce to deliver on both online and in-store tasks.

Retailers thus need to focus on a renewed retail strategy, including adjusting the ways of doing business. For this, companies have to consider adopting methods to analyze consumer behavior, ensure value proposition and redesign operating models.

Online Retailers Focus on Offline Store Formats: Amid news of big brands resorting to enhancing digital presence, 2017 also saw some leading online pure plays launching offline or physical stores. These offline stores basically serve as a marketing tool to boost online business. Some e-tailers that launched physical stores include Amazon, Birchbox, Bonobos, Everlane, Rent the Runway and Warby Parker.

On the other side, brick-and-mortar stores are continuously making efforts to improve online and omni-channel presence in order to keep up with evolving shopping habits. This is working well for retailers as customers prefer to shop directly from the brand's e-commerce site.

Some notable names that have boosted their online presence are Macy's Inc. , V.F. Corp. , American Eagle Outfitters Inc. , Target Corp. and The Gap Inc. , among others. This trend of online retailers opening physical stores and brick-and-mortar retailers making collaborations and acquisitions to expand online is going to prove beneficial for the industry in 2018.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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American Eagle Outfitters, Inc. (AEO): Free Stock Analysis Report

Gap, Inc. (The) (GPS): Free Stock Analysis Report

Target Corporation (TGT): Free Stock Analysis Report

Macy's Inc (M): Free Stock Analysis Report

VF Corporation (VFC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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