Retail sales declined slightly last December, owing to historically high inflation rates and declining consumer confidence. However, despite supply chain disruptions, improving consumer demand and declining COVID-19 cases suggest the retail industry will witness solid growth going forward.
Fundamentally sound retail stocks with impressive financials are gaining traction. Investors’ interest in this space is evidenced by the VanEck Vectors Retail ETF (RTH) 4.3% returns over the past six months.
Given this backdrop, Wall Street analysts expect strong retail stocks Bath & Body Works, Inc. (BBWI), Academy Sports and Outdoors, Inc. (ASO), and Stitch Fix, Inc. (SFIX) to gain 44% – 54% in price in the coming months. These stocks could thus be solid additions to one’s watchlist.
Bath & Body Works, Inc. (BBWI)
BBWI in Columbus, Ohio, retails body care, home fragrance products, soaps, and sanitizers. It operates approximately 1,750 company-operated Bath & Body Works locations and 300 international franchised locations, along with its website.
BBWI’s international sales increased 36.7% year-over-year to $73.7 million for the third quarter, ended Oct.30, 2021. Its U.S and Canada stores sales came in at $1.24 billion, up 3% year-over-year. Also, its adjusted net income from continuing operations was $244.78 million, up 3.6% year-over-year.
Analysts expect BBWI’s revenue to grow 5.5% to $7.25 billion for fiscal 2023. Its EPS is estimated to grow 51.7% to $3.93 in 2022. Over the past year, the stock has gained 54.1% in price to close yesterday’s trading session at $61.00. Wall Street analysts expect the stock to hit $88.07 in the near term, which indicates a potential 44.4% upside.
Academy Sports and Outdoors, Inc. (ASO)
ASO, through its subsidiaries, operates as a sporting goods and outdoor recreational products retailer in the United States. The Katy, Tex.-based concern operates some 259 Academy Sports + Outdoors retail locations in 16 states.
On Dec. 10, 2021, Ken Hicks, Chairman, President, and CEO, said, “We are confident that our strong assortment and value offering, coupled with our great store service, enhanced omnichannel capabilities, and resilient supply chain will enable Academy to continue to achieve excellent results through this holiday season and beyond.”
For the third quarter, ended Oct. 30, 2021, ASO’s net sales were $1.59 billion, up 18.1% year-over-year. Its adjusted net income was $164.13 million, up 66% year-over-year. And its adjusted EPS came in at $1.75, up 92.3% year-over-year.
ASO’s revenue is expected to be $6.74 billion in fiscal 2022, representing an 18.5% year-over-year rise. The company’s EPS is expected to increase 89% to $7.24 in 2022. Over the past year, the stock has gained 65.2% in price to close yesterday’s trading session at $39.01. Wall Street analysts expect the stock to hit $58.80 in the near term, which indicates a potential 50.7% upside.
Stitch Fix, Inc. (SFIX)
SFIX sells a range of apparel, shoes, and accessories through its website and mobile application in the United States. The San Francisco company offers the world’s leading online personalized shopping experience.
On Dec. 7, 2021, SFIX CEO Elizabeth Spaulding said, “With the launch of Stitch Fix Freestyle we are expanding and broadening our offering, and we are excited to continue to enhance the experience for clients through the introduction of new product features and expanded merchandise selections, increasing the number of purchase occasions we serve. Overall, we are pleased with the important progress we are making towards our vision of becoming the global destination for personal shopping.”
SFIX’s net revenue increased 18.5% year-over-year to $581.24 million for its fiscal 2022 first quarter, ended Oct. 30, 2021. The company’s cash and cash equivalents came in at $249.68 million for the period ended Oct. 30, 2021, compared to $129.78 million for the period ended July 31, 2021. Its total assets were $929.42 million, versus $819.15 million for the same period.
For its fiscal 2023, analysts expect SFIX’s revenue to be $2.57 billion, representing a 13% year-over-year rise. The company’s EPS is expected to increase 11.7% in 2023. It surpassed EPS estimates in each of the four trailing quarters. It closed yesterday’s trading session at $16.33. Wall Street analysts expect the stock to hit $25.20 in the near term, which indicates a potential upside of 54.3%.
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REVISED: 2023 Stock Market Outlook (includes top 7 picks)
BBWI shares were trading at $61.15 per share on Thursday afternoon, up $0.15 (+0.25%). Year-to-date, BBWI has declined -12.38%, versus a -5.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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