CBRE Retail Research expects combined e-commerce sales in November and December to increase to more than double, to at least 40% year-over-year. And 32% of all retail sales during these two months are expected to be conducted online. As a result, companies engaged in online retail business are expected to significantly benefit during this holiday season.
Customers will especially shop online this year to avoid crowded stores and the risk of exposure to the virus. Online retail companies are taking several measures to boost their sales during the holiday season, including offering discounts and creating brand awareness through social media and other channels.
Companies like Best Buy Co., Inc. (BBY), Etsy, Inc. (ETSY), and The Gap, Inc. (GPS) have already witnessed a huge surge in their online sales thanks to the stay-at-home norm. These companies are expected to benefit significantly from the trend to buy online this holiday season.
Best Buy Co., Inc. (BBY)
BBY is a retailer of technology products through both online and offline channels. The company’s offerings include television and home theatres, Blu-ray devices, smart home devices, car stereos, and more. BBY’s stock has gained 35.3% so far this year.
The company is gearing up for Black Friday and has announced a slew of discounts across major product categories. In addition to preparing for the holiday season, the company is also making moves towards greater sustainability. BBY has partnered with US Bank and Longroad Energy to develop the Little Bear Solar Project, which would have the capacity of producing 480,000 megawatt hours of electricity.
For the quarter that ended August 2020, the company saw an increase in enterprise comparable sales of 5.8% year-over-year. The company’s comparable domestic online sales rose 242%, compared to the same period last year.
BBY is expected to witness revenue growth of 6.1% for the quarter ending January, 2021 and 4.5% in 2021. The company’s EPS is estimated to grow 18.6% in 2021 and at a rate of 7.4% per annum over the next five years.
How does BBY stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
B for Peer Grade
A for Overall POWR Rating
The stock is also ranked #2 out of 36 stocks in the Specialty Retailers industry.
Etsy, Inc. (ETSY)
ETSY enables people to connect both offline and online to make, buy, and sell specialty items along with regular items. The company’s platform deals in handmade and vintage items, paper goods, candles, music, wood-working items, and so on. ETSY’s stock has gained 203.6% so far this year.
The company is preparing to hold its annual Cyber Week Sales Event, which will feature discounts of up to 60% across all product categories. This event is slated to last for ten days and will help the company generate high sales during the holiday season. Another move that should help the company gain from the holiday season is its partnership with Klarna, which will allow buyers to pay for qualified items through installments.
For the quarter that ended September 2020, the company saw an increase in revenue of 128% compared to the same period last year. The number of active buyers on its platform also grew 55.4% during the same period.
ETSY is expected to witness revenue growth of 87% for the current quarter and 12.1% in 2021. The company’s EPS is estimated to grow 3.3% in 2021 and at a rate of 57% per annum over the next five years.
In our POWR Ratings system, ETSY has been accorded an “A” grade for Industry Rank, and a “B” for Buy & Hold Grade. In the 58-stock Internet industry, it is ranked #15.
The Gap, Inc. (GPS)
GPS is a clothing retailer with global operations. The company’s brands include Banana Republic, Gap, Old Navy, Athletica, and more. GPS’s stock has gained 38% so far this year.
The company has taken a number of steps to ensure the safety of shoppers across its offline stores. Shoppers will be able to checkout their items quickly through service hubs, and the number of shoppers in the store at any time will be limited. These moves will help build consumer confidence ahead of the holiday season.
For the second quarter that ended August 1st, 2020, the company saw an increase in online sales of 95% compared to the same period last year. GPS also acquired 3.5 million new customers for its online shopping channels.
GPS is expected to witness revenue growth of 13.7% in 2021. The company’s EPS is estimated to grow 163.9% in 2022 and at a rate of 4.9% per annum over the next five years.
It’s no surprise that GPS is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, Buy & Hold Grade, and Peer Grade. In the 65-stock Fashion & Luxury industry, it is ranked #13.
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BBY shares were trading at $119.33 per share on Friday morning, up $0.50 (+0.42%). Year-to-date, BBY has gained 38.81%, versus a 12.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...
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