Retail stocks are not what they used to be with the rise of cheaper and much more streamlined shopping experiences that are provided by companies such as Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT). Other companies in the retail marketplace have struggled with customer retention and retail location foot traffic. Let alone the rising interest rates that have drastically affected the consumer discretionary sector. Consumers turning to buying a large portion of retail products from online sources compounds the issue facing companies that receive most of their revenue from brick-and-mortar locations.
Below, I will discuss a few companies that have been performing substantially better than other retail stocks. They all have taken a unique route to remain relevant and continue to see growth in overall profits and operating margins. These companies stand out from their competitors and offer an opportunity for investors to build and diversify their portfolio within a beaten-down sector that has companies that may continue to shine and provide great returns.
Build-A-Bear Workshop (BBW)
Build-A-Bear Workshop (NYSE:BBW) is a specialty retailer that provides plush animals and similar products to their customers in North America, the U.K. and Ireland. They have over 500 retail locations that are corporate-owned, franchised or owned by a third party. Their primary business model is direct-to-consumer, supplying unique plush products to consumers. The company also has an e-commerce business.
Build-A-Bear Workshop started in St. Louis, Missouri in 1997, and began trading publicly back in 2004. Since the summer of 2021, their share price has tripled and it’s up by 53% year-to-date. The company has seen sustained growth in revenue over the last couple of years, even in the rocky environment that has affected most retail companies.
On its first quarter results for 2023, the company reported net income growth of 3% and an increase in total revenue of 2% compared to the year before. The CEO also stated that they’re on track to have a record-breaking year for total sales in 2023, following 2022, which was the best year in the company’s history for annual profits, making it one of the top retail stocks. The next earnings release for the company is slated to take place on August 24.
Abercrombie & Fitch (ANF)
Abercrombie & Fitch (NYSE:ANF) It’s an apparel retailer that is under the brands Hollister, Abercrombie, Gilly Hicks and Social Tourist. Headquartered in New Albany, Ohio, they operate over 750 locations in North America and internationally. They have a number of sites that are franchised and sell products through their wholesale and e-commerce channels.
Over the past year, the company’s share price has soared by 157%. They have seen profit growth and continued consumer interest while other retailers have struggled to stay profitable.
On August 23, they released their second-quarter earnings, which beat expectations and sent the stock soaring by 24%. This increased interest for investors was due to sales growth of 16% year-over-year, and positive earnings per share, which came in at $1.10. Their Abercrombie brand sales increase by 26% and Hollister grew by 8% year-over-year. Also, they raised their full-year outlook for 2023 for total sales and operating margins.
Marks and Spencer Group (MAKSY)
Marks and Spencer Group (OTCMKTS:MAKSY) they are headquartered in London, U.K. They operate retail locations throughout the United Kingdom and primarily operate as a grocery store, but they also carry apparel, home products and offer financial services.
Their share price over the last year has surged by 78% due to consistency and strong financial results. Their recent annual financial statement reported revenue growth of 10% and net income increased by 18% compared to last year. The company also stated that international sales grew by 11% within the same time period due to increased demand for clothing products. It’s projected that modest profit growth will continue through fiscal year 2024.
As of this writing, Noah Bolton did not hold (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.
