Every sector of the economy has its own cycle and as an investor you need to know what cycle your company has. In the retailing sector, the big season is the the day after Thanksgiving or Black Friday all the way to Christmas or December 25. Then the big discounts come to the New Year. If prospects or forecasts are good, then profits can be made.
In an article by Anne D’Innocenzio of the Associated Press, the prospects for a good season are in place – companies have hired many people, the companies are paying higher wages and shoppers are returning to stores and buying all types of items.
There are concerns and they include the supply shortages, higher prices and staffing issues.
According to Aurelien Duthoit, senior advisor to Allianz Research, shoppers on average should b e buying 5 to 17% more on toys, clothing, appliances, TV as compared to last year.
The National Retail Federation is expecting holiday sales to be up 8.5% to 10.5%.
The biggest mall in the US, the Mall of America, its executive VP of business development and marketing Jill Renslow expects to see sales close to 2019 levels.
During the height of the pandemic a number of iconic retailers such as Neiman Marcus, JC Penney and Brooks Brothers had to be restructured with bankruptcy hearings, but big box stores such as Walmart, Target and Costco did very well. During 2020 the percentage of retailers who faulted on debt rose to 20%, this year it is 2%.
Coresight Research, a global research firm, noted there has been 5,057 store closings but 5,103 store openings. It was expected the number of store closing in 2020 might be up to 25,000 but the number was just over 8,000.
Linking to dividend paying stocks, every sector has a cycle and because we all have to shop somewhere we all can pay attention to retail stores. Whether you invest in the stores is up to you, but if you do, know the cycle and pay attention how sales are doing when you go to the stores. If you do not see the activity you think you should, you can easily look for alternative investments.
There are more questions than answers, till the next time – to raising questions.