Port congestion, factory shutdowns, and labor shortages contributed to a plethora of supply chain issues last year which negatively affected the shoe and apparel industry, among many others. However, with continuing shortages predicted, retailers are preparing themselves to survive in this environment. Stretching inventory, reducing marketing expenditures, sourcing locally, creating alternative products, and using more factories are some of the measures through which retailers expect to meet the consumer demand.
Furthermore, factories are adopting new predictive analytics methods and other technological tools to stay more informed regarding delays, make better real-time decisions, and drive new business models. According to a UBS report, supply chain challenges are expected to ease by mid-2022.
Given this backdrop, we think it could be wise to bet on quality stocks Columbia Sportswear Company (COLM), Foot Locker, Inc. (FL), and Shoe Carnival, Inc. (SCVL). These stocks could gain significantly this year based on their strong financials and solid growth attributes.
Columbia Sportswear Company (COLM)
COLM in Portland, Ore., designs, markets, and distributes outdoor, active, and everyday lifestyle apparel, footwear, accessories, and other products through four geographical segments–the United States; Latin America and Asia Pacific; Europe, Middle East, and Africa; and Canada. As of Dec. 31, 2020, it operated approximately 450 retail stores.
This month, COLM collaborated with USA Curling to unveil the official uniforms that the USA Curling National Team will wear throughout the competition in the 2022 Olympic and Paralympic Games in Beijing, China. This collaboration has helped COLM work with new technologies and designs, thus creating innovative products.
During the third quarter, ended Sept. 30, 2021, COLM’s net sales increased 14.8% year-over-year to $804.71 million. The company’s gross profit grew 19.1% from its year-ago value to $408.36 million. Its operating income rose 55.8% from the prior-year quarter to $133.46 million. Also, the company’s net income increased 60.3% year-over-year to $100.56 million.
COLM’s revenue is expected to increase 14.7% year-over-year to $3.51 billion in its fiscal 2022. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Also, its EPS is expected to increase 193.8% in its fiscal year 2021 and 15.1% in fiscal 2022.
COLM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a B grade for Quality, Growth, and Sentiment. We have also graded COLM for Value, Stability, and Momentum. Click here to access all COLM’s ratings. COLM is ranked #2 of 37 stocks in the B-rated Athletics & Recreation industry.
Note that COLM is one of the few stocks handpicked by our Chief Value Strategist, Steve Reitmeister, currently in the POWR Value portfolio. Learn more here.
Foot Locker, Inc. (FL)
New York City’s FL is a prominent athletic shoe and apparel retailer. It sells accessories, equipment, and athletic footwear under various brand names that include Foot Locker, Kids Foot Locker, Champs Sports, and Sidestep. FL operated 2,998 retail stores and 127 franchised Foot Locker stores across 27 countries as of Jan. 30, 2021. The company is known for celebrating sneaker and youth culture around the globe.
Last month, FL launched Cozi, its first proprietary womenswear brand available globally. Cozi is a comfortable, affordable, and stylish female-centric apparel line and should provide its customers confidence and style to match their personalities.
FL’s revenue increased 3.9% year-over-year to $2.19 billion in the third quarter. ended Oct.30, 2021. The company’s income from operations grew 10.1% from the year-ago value to $196 million. Its net income came in at $158 million. Also, the company’s EPS amounted to $1.52 during the period.
FL’s revenue is expected to be $8.98 billion, increasing 18.9% year-over-year for its fiscal 2022. The company has surpassed the consensus EPS in each of the trailing four quarters. Its EPS has been estimated to grow 169.8% in fiscal 2021. The stock has increased 5.2% in price over the past month.
It is no surprise that FL has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has a B grade for Value and Momentum. Click here to see additional POWR Ratings for FL (Growth, Quality, Stability, and Sentiment). The stock is ranked #15 in the Athletics & Recreation industry.
Shoe Carnival, Inc. (SCVL)
SCVL is a footwear retailer located in 35 states and Puerto Rico. The Evansville, Ind.-based company also markets and sells its products through its e-commerce websites. SCVL offers a wide range of footwear collections for men, women, and kids and handbags, lunch boxes, backpacks, athletic products, and other accessories. The company operates its business through its subsidiaries Shoe Carnival Ventures, LLC, and SCLC, Inc., subsidiaries of SCHC, Inc.
Last month, SCVL acquired Shoe Station, Inc., which operates stores in five Southeastern states, for $67 million. The company believes that the acquisition should accelerate SCVL’s journey toward becoming a multi-billion-dollar retailer in the future.
For its fiscal third quarter, ended Oct. 30, 2021, SCVL’s net sales increased 29.8% year-over-year to $356.34 million. The company’s gross profit grew 64.1% from its year-ago value to $144.06 million. Its operating income rose 209.6% from the prior-year quarter to $62.42 million. And the company’s net income increased 219.1% year-over-year to $46.84 million.
SCVL’s revenue is expected to increase 32% year-over-year to $1.29 billion in its fiscal year 2022. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. The company’s EPS is expected to increase 819.6% in fiscal 2021. The stock has surged 66.8% in price over the past year.
SCVL’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The stock also has an A grade for Quality and a B grade for Value and Momentum.
In addition to the POWR Rating grades I have just highlighted, one can see SCVL’s ratings for Stability, Sentiment, and Growth here. SCVL is ranked #1 of 64 stocks in the A-rated Fashion & Luxury industry.
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COLM shares were trading at $91.10 per share on Thursday afternoon, down $0.08 (-0.09%). Year-to-date, COLM has declined -6.51%, versus a -3.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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