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Students returning to school will help Under Armour, Kontoor Brands, VF, Capri Holdings, and Crocs.
Dreamstime.com/Andres Barrionuevo Lopez
The back-to-school buying season is rapidly approaching now that the Fourth of July has passed. According to Piper Sandler, this is fantastic news for retailers. Back to school (BTS) in 2020, like so much else last year, was not a typical season, with so many schools remaining virtual, albeit many stores still benefited.
This year, commentator Erinn Murphy expresses her enthusiasm for BTS: Many students are returning to in-person study, and the increased child tax credit and high savings rates indicate that consumers have the financial resources to spend. Furthermore, merchants have been operating with lean inventories, which means they have had less need to discount to sell old inventory, and therefore have significant pricing power.
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The rising tide, however, will not necessarily raise all boats to the same degree. According to her findings, mall-based retailers—
American Eagle Outfitters is a clothing brand owned by American Eagle Outfitters
(AEO),
L Brands is a company that sells clothing.
(LB),
Gap
(GPS), as well as
Abercrombie & Fitch Abercrombie & Fitch Abercrombie & F
Athletic brands (ANF)
Nike
(NKE),
Under Armour is a sportswear brand owned by Under Arm
(UAA) and the
lululemon athletica lululemon athletica lululemon athletic
(LULU)—as well as discount retailers—
Burlington Stores is a retailer in Burlington, Vermont.
(BURL),
TJX
(TJX), as well as
Ross Stores is a chain of department stores in the United
(ROST)—
“All are on track to outperform 2019 sales levels.” Department stores, on the other hand—
Kohl’s
(KSS),
Macy’s
& (M)
Nordstrom
(JWN)—as well as more traditional suppliers—
Capri Holdings is a company based in the United States.
(CPRI),
Brands Kontoor
& (KTB)
Tapestry
(TPR)—could fall short of expectations. Murphy, on the other hand, finds winners in all categories. A revival of organized sports will benefit Under Armour, while a shift in denim designs will benefit Kontoor Brands. Consumer interest in outdoor activities has resurfaced, and trends favoring Vans footwear are a windfall for the brand.
VF
(VFC), whereas Capri will benefit from the Versace name.
Crocs
(CROX) has seen both brand momentum and pricing power in recent months, notably pulling back on promotions. All five stocks have an Overweight rating from her. While BTS may be strong this year, there are many unknowns for early 2022, as retailers must deal with a stimulus boost this year as well as growing input costs. She claims that brands with the best pricing power and direct-to-consumer strategies will continue to benefit disproportionately, citing Nike, VF, and others.
Estee Lauder is a cosmetics company founded by Estee Lau
Crox, EL, and lululemon Teresa Rivas may be reached at teresa.rivas@barrons.com./n
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