Retail sales fell a seasonally adjusted 1.1% month-over-month in December amid the high inflation and supply chain disruptions. However, retail sales rose 6% on a year-over-year basis. October was the last strong retail sales month of 2022, as consumer spending has been robust despite the macro headwinds.
Retail sales might get a boost soon as inflation eases and the job market remains tight. Nonfarm payrolls increased by 517,000 in January, beating analysts’ estimate of 187,000, while the unemployment rate fell to 3.4%, the lowest since May 1969.
According to Trading Economics’ econometric models, retail sales in the United States are anticipated to climb 1.5% year-on-year in 2024 and 1.9% year-on-year in 2025.
The global digital retail market is expected to grow at a CAGR of 26.4% until 2027. Investors’ interest in retail stocks is evident from the VanEck Vectors Retail ETF’s (RTH) 4% rise over the past three months.
Dillard’s, Inc. (DDS)
DDS operates retail department stores in the south-eastern, southwestern, and midwestern areas of the United States. Its stores offer merchandise, fashion apparel, accessories, cosmetics, home furnishings, and other consumer goods.
In terms of forward EV/Sales, DDS is currently trading at 0.96x, 20.6% lower than the industry average of 1.21x. Its forward EV/EBITDA of 5.34x is 46.3% lower than the industry average of 9.96x.
DDS’s trailing 12-month gross profit margin of 44.06% is 24.4% higher than the industry average of 35.41%. Its trailing-12-month Levered FCF margin of 11.29% is 736.2% higher than the 1.35% industry average.
DDS’s net sales came in at $1.54 billion for the third quarter ended October 29, 2022, up 4.3% year-over-year. Its EPS came in at $10.96, up 11.7% year-over-year. Also, its total assets came in at $3.79 billion as of October 29, 2022, compared to $3.74 billion as of October 30, 2021.
Analysts expects DDS’s revenue to increase 5.2% year-over-year to $6.97 billion in 2023. Its EPS is expected to increase 128% year-over-year to $46.96 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past six months, the stock has gained 61.3% to close the last trading session at $397.91.
DDS’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
DDS has an A grade for Quality and a B for Value. In the Fashion & Luxury industry, it is ranked #14 out of 68 stocks. Click here for the additional POWR Ratings for Growth, Sentiment, Momentum, and Stability for DDS.
The Buckle, Inc. (BKE)
BKE operates as a casual apparel, footwear, and accessories retailer for young men and women. It markets a selection of brand-name casual apparel and private-label merchandise primarily comprising BKE, Buckle Black, Salvage, and Red by BKE, among others.
BKE’s forward P/E of 8.54x is 41.8% lower than the industry average of 14.69x.
BKE’s trailing-12-month gross profit margin of 59.43% is 67.8% higher than the 35.41% industry average. Its trailing-12-month levered FCF margin of 11.14% is 725.4% higher than the 1.35% industry average.
BKE’s sales, net of returns and allowances, came in at $332.41 million for the third quarter that ended October 29, 2022, up 4% year-over-year. Its gross profit came in at $165.40 million, up 2.7% year-over-year. Its total assets came in at $505.86 million for the period ended October 29, 2022, compared to $391.21 million for the period ended January 29, 2022.
BKE’s revenue is expected to increase by 2.5% year-over-year to $1.33 billion in 2023. Its EPS is expected to grow 8% per annum for the next five years. Over the past nine months, the stock has gained 42.2% to close the last trading session at $42.59.
BKE has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Quality and B for Sentiment. It is ranked #7 in the same industry.
In addition to the POWR Ratings stated above, we have also rated BKE for Growth, Value, Stability, and Momentum. Get all BKE ratings here.
Movado Group, Inc. (MOV)
MOV designs, sources, markets, and distributes watches worldwide and provides after-sales and shipping services. The company operates in two segments: Watch and Accessory Brands and Company Stores.
MOV’s forward EV/Sales of 0.89x is 26.5% lower than the industry average of 1.21x. Its forward EV/EBITDA multiple of 4.96 is 50.2% lower than the industry average of 9.96.
MOV’s trailing-12-month gross profit margin of 58.34% is 64.8% higher than the 35.41% industry average. Its trailing-12-month levered FCF margin of 8.65% is 540.6% higher than the 1.35% industry average.
MOV’s non-GAAP net sales for the nine months ended October 31, 2022, increased 5.9% year-over-year to $557.63 million. The company’s non-GAAP gross profit increased 8.9% year-over-year to $324.64 million. Its non-GAAP net income attributable to MOV increased 18.2% year-over-year to $73.53 million.
Additionally, its non-GAAP EPS came in at $3.19, representing a 21.3% increase from the year-ago period.
The consensus revenue estimate of $742 million for the fiscal year 2023 indicates a marginal increase year-over-year. Also, its EPS is expected to grow marginally year-over-year to $4.01 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past three months, the stock has gained 2.6% to close the last trading session at $34.12.
MOV’s POWR Ratings reflect the promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
MOV is also rated an A in Value and Quality. It is ranked #4 out of 68 stocks in the same industry. To see additional POWR Ratings for Sentiment, Stability, Growth, and Momentum for MOV, click here.
J.Jill, Inc. (JILL)
JILL operates as an omnichannel retailer for women’s apparel under the J.Jill brand in the United States. It offers two sub-brands extensions of its brand aesthetic: Pure Jill and Wearever.
JILL’s forward EV/Sales of 0.92x is 23.4% lower than the industry average of 1.21x. Its forward Price/Sales multiple of 0.47 is 51.5% lower than the industry average of 0.96.
JILL’s trailing-12-month gross profit margin of 68.49% is 93.4% higher than the 35.41% industry average. Its trailing-12-month levered FCF margin of 12.98% is 861.3% higher than the 1.35% industry average.
JILL’s gross margin came in at $105.02 million for the third quarter that ended October 29, 2022, up marginally year-over-year. The company’s adjusted net income increased 19% year-over-year to $10.98 million.
Also, its adjusted EBITDA gained 2.1% year-over-year to $27.52 million, while its adjusted EPS came in at $0.77, representing an 18.5% increase from the prior-year quarter.
Analysts expect JILL’s revenue to increase 4.4% year-over-year to $610.70 million in 2023. Its EPS is estimated to increase 37.1% year-over-year to $2.92 in 2023. It has surpassed EPS estimates in all four trailing quarters. Over the past nine months, the stock has gained 76.3% to close the last trading session at $28.21.
It’s no surprise that JILL has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Sentiment and Quality. It is ranked #2 in the same industry. Get JILL’s ratings for Growth, Stability, Sentiment, and Momentum here.
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DDS shares were unchanged in premarket trading Thursday. Year-to-date, DDS has gained 23.12%, versus a 8.19% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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