Even with threats such as inflation and the virus, retailers are looking forward to a significant increase in consumer spending this holiday season. Recognized apparel retailers are now taking advantage of this opportunity. Lululemon Athletica (NASDAQ:) and Abercrombie & Fitch (ANF) should benefit. What stock do you think is the best buy? Read more to find out.Lululemon Athletica Inc. (LULU) and Abercrombie & Fitch Co. (ANF) are two popular companies in the apparel retail industry. LULU designs, manufactures, and distributes men’s and women’s athletic apparel and accessories. Lululemon, Ivivva and other brands of the company sell their products in outlets and warehouses. Yoga studios, gyms, fitness centers and mobile apps are some examples. ANF, on the other hand offers a variety of clothing, accessories, personal care, intimates and apparel for children, men and women. ANF sells the Abercrombie and Hollister products via its retail outlets, direct to consumers channels, third party wholesalers and franchises as well as licensing and licensing agreements.
Most apparel retailers have a strong digital presence that has allowed them to recover from the pandemic lows and introduce new styles in line with changing consumer trends. High retail sales are also due to rising foot traffic, decreasing jobless claims and increased consumer spending. National Retail Federation (NRF), predicts that holiday retail sales will increase between 8.5% and 10.5% over November, December.
While the recent outbreak of the omicron Coronavirus variant may slow down foot-traffic to brick-and-mortar shops, ecommerce sales will help generate solid earnings for this holiday season. Investors’ interest in retail stocks is evident from the SPDR S&P Retail ETF’s (XRT) 2.5% returns over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 1.2% gains. Both LULU as ANF will benefit.
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