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Retail is a tough game. Competition is fierce, consumer spending can be fickle and the entire sector’s fortunes are linked to the state of the economy. Over the past few years, the retail industry has endured one of the worst periods in its history and retail stocks have taken a hit because of that.
The Covid-19 pandemic forced retail outlets to close or operate at reduced capacity, operations were forced into expensive transitions online and the end of the crisis left companies with bloated inventories. Then, consumer spending on discretionary items slowed as inflation spiked to a 40-year high. Consequently, the S&P Retail Select Industry Index is 7% lower today than where it was three years ago.
The good news is that retail appears to be recovering. While some companies continue to struggle, the financial results coming out of the fourth quarter of last year are encouraging and sending stock prices higher. Here are three remarkable retail stocks defying the odds in 2024.
Dick’s Sporting Goods (DKS)
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Dick’s Sporting Goods (NYSE:DKS) is up 15% in one day after the company raised its dividend by 10% and reported the biggest quarterly sales in its 76-year history. Going forward, DKS stock will pay a quarterly dividend of $1.10 per share, up from $1 previously. News of the dividend increase comes as the sports equipment retailer announced earnings of $3.85 a share versus $3.35 that was forecast on Wall Street.
Revenue in the final quarter of 2023 reached a record $3.88 billion, which was ahead of the $3.8 billion forecast among analysts. Sales were up 8% from a year earlier. Same-store sales rose 2.8%, well above the 0.8% that analysts had expected. Management also issued forward guidance that exceeded the expectations of analysts, helping to push DKS stock higher. Year to date (YTD), the company’s share price is now up 45%.
These financial results reflect positive sentiment towards retail stocks in the sporting goods sector. DKS could be a winning score for investors.
Ralph Lauren (RL)
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Like other companies in the fashion industry, Ralph Lauren’s (NYSE:RL) success often mirrors the ups and downs of retail stocks, reflecting broader consumer sentiment and market trends. But the company is once again popular with teens and young adults.
The renewed popularity of its polo shirts with the younger demographic has given Ralph Lauren’s earnings and stock a boost. So far in 2024, RL stock has gained 24%. That brings the 12-month gain in the share price to an impressive 62%. It’s quite a turnaround for a stock that had languished for over a decade.
That being said, RL stock is only back to where it had been trading in December 2014. Fortunately, analysts see more upside ahead. The median price target on the stock is currently $192.33, implying more than 5% upside from current levels. Additionally, the company’s share price has gotten a boost from strong overseas sales. In Q4 2023, Ralph Lauren’s sales in mainland China rose more than 30% from a year earlier.
Abercrombie & Fitch (ANF)
Source: Paul McKinnon / Shutterstock.com
Abercrombie & Fitch (NYSE:ANF) is another clothing retailer that is defying the odds in 2024. ANF stock is up an incredible 373% over the last 12 months, including a 38% increase so far in 2024. The outsized move in the share price, which has trounced nearly every other retail stock, comes as the company’s earnings continue to accelerate, beating Wall Street forecasts on the top and bottom lines.
Abercrombie & Fitch recently announced Q4 2023 earnings per share (EPS) of $2.97 versus $2.83 that was the consensus expectation of analysts. Revenue reached $1.45 billion, surpassing the estimated $1.43 billion. Sales during the year-end holidays rose 21% from a year earlier. Despite the blistering pace it has set, the clothing retailer expects sales to continue rising, forecasting low double-digit percentage growth in 2024.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
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