Pandemic shelter-at-home mandates have triggered a widespread demand for services that make life and work at home easier, resulting in a significant increase in retail online spending. While some brick-and-mortar retail stores are still struggling to keep up, a whole new paradigm of online sales and marketing has increased the urgency of small retailers to respond to the trend by diversifying their online platforms. This has been a boon for some retailers that are rapidly expanding their online offerings amid the crisis.
In fact, government support in the form of subsidies and tax cuts to small companies should help the small retailers to recover from losses incurred last year due to the healthcare crisis. And while some retail giants continue to hog the attention, there are other small players that have not only managed to recover from last year’s disruption but appear to be making the most of the current situation through an acceleration of their digital sales capabilities and clever business restructuring.
Since the resumption of economic activities globally along with government stimulus measures will likely boost consumer spending this year, we believe under-the-radar retail stocks Columbia Sportswear Company (COLM), and Foot Locker, Inc. (FL) are well positioned to advance.
Columbia Sportswear Company (COLM)
Based in Portland, Oregon, COLM is a designer and distributor of outdoor, active, and everyday lifestyle apparel, footwear, accessories, and equipment. It sells its products under the brand names – Columbia, Mountain HardWear, SOREL, and prAna through a company owned network of branded and outlet retail stores and brand-specific e-commerce sites.
Last month, COLM appointed Skip Potter to the role of Executive Vice President, Chief Digital Information Officer, effective April 1. As a veteran tech leader, he is expected to play a pivotal role in evolving COLM’s digital footprint and omni-channel and supply chain capabilities across the enterprise.
Also last month, the company appointed Tim Sheerin as Senior Vice President of U.S. Sales for the Columbia brand. His experience in commercial leadership will help COLM accelerate Columbia brand’s growth this year and beyond.
COLM’s prAna brand’s net sales have increased 11% year-over-year to $36.9 million in the fourth quarter ended December 31, 2020. The company’s gross margin increased 50 basis points to 50.6 percent of net sales from 50.1 percent of net sales for the comparable period in 2019. And the company’s reported net sales under its Canada segment rose 36% from its year-ago value to $67.4 million over this period.
A consensus EPS estimate of $3.99 for 2021 represents a 146.3% improvement year-over-year. The consensus revenue estimate of $2.99 billion for the current year represents a 19.5% increase from the same period last year. The stock has gained 10.9% over the past year.
COLM’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
COLM has an A grade for Quality and B for Growth. Of the 33 stocks in the A-rated Athletics & Recreation industry, COLM is ranked #16.
In total, we rate COLM on eight different levels. Beyond what we stated above we have also given COLM grades for Stability, Sentiment, Value and Momentum. Get all the COLM ratings here.
Foot Locker, Inc. (FL)
Founded in 1879, FL operates as an athletic footwear and apparel retailer under brand names Foot Locker, Lady Foot Locker, Runners Point, Sidestep and others. The company also operates various, including eastbay.com, final-score.com, and eastbayteamsales.com. FL also sells team licensed merchandise for high school and other athletes.
In December, FL appointed Himanshu Parikh as Senior Vice President, Chief Information Officer. His deep expertise and breadth of experience should l help the company to build a customer-driven supply chain and evolve as a fully integrated omni-channel organization.
Also in December, FL adopted a short-term shareholder rights plan to protect the interests of all its shareholders. It also declared a dividend distribution on each outstanding share of the FL’s common stock. FL believes this plan will help drive the company’s long-term growth, profitability, and shareholder value.
FL’s sales increased 9% year-over-year to $2.11 billion in the third quarter ended October 31, 2020. The company’s comparable-store sales increased by 7.7%. Its net income grew 112% from the prior-year quarter to $265 million, while its EPS increased 117.2% year-over-year to $2.52.
A consensus EPS estimate of $0.88 for the next quarter ending April 30, 2021 represents a 231.3% improvement year-over-year. The consensus revenue estimate of $1.78 billion for the next quarter represents a 35.5% increase from the same period last year. The stock has gained 26.8% over the past year.
It is no surprise that FL has an overall rating of B, which translates to Buy in our POWR Ratings system. FL has a B grade for Quality, Value and Sentiment. In the same industry, it is ranked #17.
In addition to the POWR Ratings grades I’ve just highlighted, you can see the FL ratings for Stability, Growth, and Momentum here.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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COLM shares were trading at $101.00 per share on Tuesday afternoon, down $0.73 (-0.72%). Year-to-date, COLM has gained 15.59%, versus a 5.02% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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