Some Sparkling Retailers This Season
Himanshu is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
A number of issues, such as the sovereign debt crisis in Europe, weak consumer confidence and uncertainty regarding U.S. elections have been pulling down retailers’ performance with each passing day. However, in spite of concerns over low demand, there have been quite a few retailers that have been in the limelight with positively surprising results and breakthrough strategies. These companies have not only posted stellar results, but have also recorded good same-store sales growth for the month of June.
The first ace in the pack for the month of June is The TJX Companies (NYSE: TJX), which reported a 7% jump in same store sales, way ahead of analysts’ expectations. Increased customer visits boosted this key metric for June and TJX expects it to continue. This commendable month has led the discount retailer to raise its outlook for the year. It now expects earnings between $2.31 and $2.39, up from the previous range of $2.27 to $2.37. This positivity is a continuation of a solid first quarter posted some time back. TJX registered an 11% surge in revenue over the previous year, driven by its European sales. This was mainly due to the fact that TJX is the only discount retailer which has a major foothold in Europe. Hence, backed up by a strong quarter and an astounding month, TJX seems to have bright prospects for the future.
Target (NYSE: TGT), another discount retailer, is also in the league. It experienced a 2.1% increase in the key same-store metric for the last month and a revenue jump of 2.6% to $6.4 billion. An even better development is the fact that immense demand for health and beauty products, the type of which you’d expect customers to cut down on nowadays, has pushed revenue north. In its recent quarter, the company not only posted amazing results but also signaled towards a bright future through smart strategic initiatives. These include smaller sized stores to cut down on the costs and entry into the Canadian market – its first international expansion. This is expected to open up opportunities galore for Target, backed by its discount programs and expanded product offerings.
The number of outstanding performers in the industry is not limited to these two companies. Limited Brands (NYSE: LTD), a specialty retailer for women, was strikingly good last month. Its comparable store sales grew 7%, double that of estimated by analysts. Key driver for its whopping growth was the semi-annual sale in its Victoria’s Secret brand. Also, the early spring has made these retailers perform well but not all of them are performing this way. There are other specialty retailers such as Cato Corp (NYSE: CATO) which had a disheartening June with a drop of 10% in same store sales. Even revenue, which plunged 7% to $83.7 million, had fallen prey to the political uncertainties and other economic conditions.
After the announcement of results for the last month, it is clear that all the retail players in the industry are not performing well. It is just a few who have been pulling the right strings. These players are expected to continue with this mainly because they provide discounts, one of the best ways of attracting shoppers today. Secondly, they have been putting in efforts to fight the slowdown in their own ways. Whatever path they adopt for their growth, owning one of these stocks is probably the safest bet for your portfolio till the economy throws up some positive readings.
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