Many retail stocks have gotten crushed by a lethal combination of disappointing earnings and lackluster guidance. However, there are some gems in the bunch that are doing well despite many economists expecting the worst holiday sales in years.
Of course, the macroeconomic environment remains challenging for all retailers, so it pays for investors to be selective. Many chains are growing increasingly concerned that consumers are increasingly expecting deals and will only respond to “once-in-a-lifetime offers” that crush companies’ profit margins. But there’s more to it than that.
Some retailers are facing some company-specific issues. Walmart (WMT), the largest retailer, has faced withering criticism for lacking enough workers to keep its store shelves stocked. An ill-advised expansion into Canada is hurting No. 2 retailer Target (TGT) while shoppers have fled Kohl’s ever since the chain began shifting away from national brands.
But the following stocks are best-of-breed performers that know how to navigate a tough consumer market.