By Caroline Valetkevitch

NEW YORK, (Reuters) – Investors have zeroed in on a few hot retailers’ shares this week as U.S. holiday shopping season gets underway. They weigh the possibility of supply chain issues against the expected high consumer demand.

The day after the U.S. Thanksgiving holiday, Black Friday https://www.reuters.com/video/watch/idPE3S?now=true, has for years unofficially marked the start of the holiday shopping period and one of the busiest shopping days of the year.

The ongoing coronavirus epidemic and its impact on supplies likely drove shoppers away early. A Commerce Department report indicating that U.S. retail sales soared in October shows this.

“We are now in a completely different position than the previous two years.” Christmas is a four-month season https://www.reuters.com/business/retail-consumer/with-us-inventories-tight-black-friday-drags-through-november-2021-11-23, starting in October,” said Phil Orlando, chief equity strategist and head of the client portfolio management team at Federated Hermes (NYSE:) in New York.

Among other trends, the Black Friday https://www.reuters.com/business/retail-consumer/santa-claus-is-coming-town-what-cost-walmart-target-2021-11-15 average promotional discount is lower than in previous years, according to data compiled by Refinitiv and StyleSage Co, a data analytics platform, suggesting consumers may not see the bargains they’ve seen before.

Refinitiv’s data shows that analysts remain more positive about holiday shopping season. It found that discounts, home furnishing, and home improvement businesses are likely to enjoy strong sales growth.

The broader retail market has been outperformed by many retailers this year. An S&P retail exchange-traded fund is up 57% since Dec. 31, compared with about a 25% gain in the year-to-date.

Refinitiv noted that there were many companies who faced “difficult comparations” between the fourth and last year, when sales were high, but still have positive outlooks for this quarter. Crocs (NASDAQ:) Inc, Williams-Sonoma (NYSE:), Lowe’s (NYSE:) Cos, Home Depot (NYSE:), Lululemon Athletica (NASDAQ:) Target (NYSE:).

Jharonne Marsis, director for consumer research at Refinitiv, stated, “Last Year they knocked the ball out of the park. You’re still seeing strong figures, which indicates that strength and desire for the products is holding up very well.”

Among the retailers with the best year-to-day gains are Bath & Body Works, Tractor Supply (NASDAQ:) Autozone and Etsy (NASDAQ:).

Recently, retailers reported problems with supply disruptions. Strategists suggest that this holiday season inventory levels might be a concern for some retailers.

Gap Inc (NYSE:). Late Thursday, Gap Inc (NYSE:) lowered its full year forecast due to supply chain disruptions such as factory closings. Stock plunged after hours trade.

Walmart Inc (NYSE:) Inc increased its profit forecast and annual sales last week. However, global supply chain disruptions impacted its margins during the third quarter.

According to the Refinitiv analysis, online shopping will again be strong for this holiday season. Therefore, Amazon.com (NASDAQ) will remain the most watched website.

Orlando stated that “online is going to be the king” and that the best companies to perform this season will be those that can get around supply issues like Amazon and Target (NASDAQ:).

The shares of large department stores, such as Macy’s, Nordstrom, and Kohl’s, that draw more holiday traffic, will also be closely monitored.

Macy’s shares shot up after Macy’s raised its profit and sales outlooks, and indicated that it is well-stocked for the holidays.