Despite rising uncertainties due to the trade war, the U.S. economy continues to expand and consumer outlays continue to increase at a steady clip. Such encouraging factors should surely boost retail sales in the upcoming holiday season per National Retail Federation (NRF).
NRF Forecasts Strong Holiday Season Sales
On Oct 3, NRF stated that it expects holiday retail sales during November and December to beat 2018’s mark and increase between 3.8% and 4.2% to total sales between $727.9 billion and $730.7 billion.
NRF President and CEO Matthew Shay stated that the trade war and slowdown in economy may restrain sales but the U.S. economy is still growing and thanks to growth in consumer spending, the issues can be sidelined.
Record low unemployment rate of 3.5% and higher wages have increased consumers’ ability to spend more in the upcoming holiday season.
Last year, holiday sales totaled $701.2 billion and increased 2.1% in spite of a government shutdown, highly volatile stock market, tariffs issues and more. This year, the fear of trade war has definitely worsened and holiday merchandise that includes apparel, footwear and televisions are subject to higher tariffs.
But retailers are using countless tactics to mitigate price rise due to higher tariffs and encourage consumers to buy more. On the other hand, NRF forecasts online and other non-store sales to increase between 11% and 14% from $146.5 billion in 2018 to the $162.6 billion to $166.9 billion bracket.
A tight labor market due to rising uncertainties from trade war has dampened hiring in the service sector in September, settling the index at 52.6. But the forecast holiday hiring numbers seem to be quite promising. NRF forecasts that retailers will hire between 530,000 and 590,000 temporary workers this year. Macy's, Inc. (M - Free Report) and Target Corporation (TGT - Free Report) will hire 80,000 and 130,000 seasonal workers, respectively.
Stocks to Watch Out For
Genesco Inc. (GCO - Free Report) , Tilly's, Inc. (TLYS - Free Report) and Zumiez Inc. (ZUMZ - Free Report) are some of the retail stocks that should benefit from strong holiday sales. Needless to say, these are publicly traded specialty retailers selling apparels, footwear and other holiday items. These stocks carry a Zacks Rank #1 (Strong Buy). Moreover, the Zacks Consensus Estimate for the companies’ current-year earnings has increased in the past 60 days. What’s more, these companies are also expected to post earnings growth for the current year that will exceed their respective sub-industry’s projected growth rate for the same period.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
(We are reissuing this article to correct a mistake. The original article, issued on October 7, 2019, should no longer be relied upon.)