NEW YORK, Sept. 3 (Reuters) – Strong back-to-school sales at the end of the summer could give U.S. retailers the boost after many industry stocks have lagged relative to the market in the sense wide in recent months.
The S&P 500 Retail Index (.SPXRT), which includes Amazon.com Inc (AMZN.O), has only risen about 2% for the quarter so far, compared to a gain of 6% for the S&P 500 (.SPX).
Some retailers, including Macy’s Inc (MN) and Walmart Inc (WMT.N), recently cited bullish back-to-school data as they boosted annual sales forecasts in the United States, but other data on August US sales and retail report are expected later this month. . Read more
With the help of advance children’s tax credits and pandemic-related stimulus checks, some consumers have had extra cash to load backpacks and other supplies.
Most American schools are returning to classroom instruction this year after months of distance learning. New York City public schools reopen on September 13, and many schools in the New York metro area begin within days of Labor Day weekend, when parents typically continue to pick up school supplies. .
Retail stocks as well as some other value-related sectors linked to the economy have underperformed growth sectors in recent months, said Phil Orlando, chief equity market strategist at Federated Hermes in New York. The S&P Value Index (.IVX) is up about 2% for the quarter, while the Growth Index (.IGX) is up more than 8%.
But that trend is likely to change, and retail is one of the groups that “will take a second wind here and last until the end of the year … until the beginning of next year,” he said. -he declares.
Holiday sales and back-to-school sales have a strong correlation, he noted.
Investors are optimistic about back-to-school sales given comparisons to last year, said Michael James, general manager of equity trading at Wedbush Securities in Los Angeles.
“I don’t think there is any doubt that the start of the school year will be much stronger than last year,” he said.
“This has been factored into the expectations somewhat,” he said, noting that retail stocks are still higher than six months ago.
Additionally, supply chain issues could be a drag for some retailers, said Eric Kuby, chief investment officer for North Star Investment Management Corp in Chicago.
“Our operating assumption is that it doesn’t get worse.… They work hard on the supply chain to get the products to the shelves,” he said.
Stocks of some large retailers have outperformed, so investors may have to look for good deals, Kuby said.
“We haven’t sold any (retail stocks)… but our preferred choice in retail is Target, and it’s great stock but it’s not cheap,” he said. declared.
Shares of Target Corp (TGT.N) are up about 39% year-to-date, compared to about 14% gain in the S&P 500 retail index over the same period.
Shares of companies related to the products may have more leeway, Kuby said, such as ACCO Brands Corp (ACCO.N), which his company owns.
“Investor attention will shift more to holiday sales,” he said. “This is where the focus is going to be.”
Reporting by Caroline Valetkevitch; Editing by Alden Bentley and Richard Chang
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