Retailers Looking for a Lift
The Back-to-School Bump
The back-to-school shopping season is forecast to be the biggest ever, as children return to the classrooms after more than a year of lockdowns and restrictions. That bodes well for some of the nation’s retailers including Target (TGT), Urban Outfitters (URBN), American Eagle Outfitters (AEO), and Dicks Sporting Goods (DKS). Many need an extra boost to keep their share price momentum going.
There are a lot of reasons for retailers to be optimistic. A recent survey showed families are expected to spend 16% more on back-to-school shopping. Spending amounts typically increase 1% to 3% year-over-year. The pent-up demand from the pandemic is driving the increase but so is the extra cash households are getting from the government. The expanded child-tax credit started hitting bank accounts on July 15, with the monthly payout increasing $83 a month per child.
Retailers Face Tough Comparisons
Retail stocks have been gaining this year as pandemic restrictions ease and the economy reopens, outperforming the S&P 500. Companies like Target and Dicks Sporting Goods saw strong sales during last year’s summer months, which sets up tough comparisons this season. Without back-to-school sales, it could prove difficult to meet and beat the high bar set in 2020. But a big back-to-school shopping season could potentially help keep the momentum going.
Department stores and specialty retailers such as American Eagle face easier year-over-year comparisons but investors still expect a strong showing nonetheless. Analysts are forecasting sales at American Eagle and Urban Outfitters to increase 15.2% and 11% respectively when compared to pre-pandemic results.
Earlier Shopping Period
This year’s back-to-school selling season may peak sooner than in years past given the pent-up demand. If consumers learned anything during the pandemic, it was to get their hands on supplies quickly. To avoid any shortages families are beginning to shop for back-to-school supplies and clothes in July instead of August. That means retailers which have fiscal second quarters ending in July or the beginning of August could see an early benefit.
Schools across the country are reopening for in-person learning, which means families have a lot of shopping to do. It will be interesting to see which retailers stand out.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS21072703
All your finances.
All in one app.
App Store rating
