2021 has been an eventful year for retail.
Supply chain collapses, record inflation and staff shortages made it clear which brands could adapt and which would be phased out.
As 2021 draws to a close, uncertainty remains, especially with the most recent increase in COVID-19 cases in the United States. Still, analysts and market watchers are hopeful that some brands will maintain their momentum. We reached out to them and asked where they see companies heading in 2022 and what stocks they recommend monitoring.
Below are their picks for the best stock buys in 2022.
LULU – Lululemon
Sportswear was a major trend throughout 2020 and 2021 as people at home sought a mix of comfort and style. According to a note from Jane Hali & Associates, LLC Investment Research, sportswear will continue to be a dominant trend in 2022, which puts Lululemon in a strong position for next year. In addition to its clothing offerings, Lululemon is also expected to start selling its brand new footwear line in early 2022, which experts say could be a major competitor for more established brands.
SHOO – Steve Madden
Steve Madden posted fantastic results throughout 2021. In November, the company achieved the highest quarterly sales and profits in company history. For the third quarter, revenue increased 52.4% to $ 528.7 year-on-year and increased 5% from 2019. Net income was $ 66.6 million, or 0 , $ 82 per diluted share, up 22% from 2019. At the time, analysts said the company’s success will likely be even greater once delays and supply chain congestion will be eliminated. In a report outlining his stock picks for 2022, BTIG analyst Camilo Lyon called Steve Madden and other fashion brands as stocks to watch in 2022.
“We expect fashion-focused companies to benefit disproportionately from the pick-up in spending in outlet categories, particularly in clothing and footwear / accessories,” the report said.
TPR – Tapestry
Lyon also pointed out that Tapestry was another stock to watch in 2022. In November, Coach’s parent company Kate Spade and Stuart Weitzman, based in New York City, reported results for another solid quarter. On a call with investors, executives maintained an optimistic outlook ahead of the holidays thanks to a strong inventory position, growing product demand and the effects of the company’s acceleration program, which leverages the data. and analytics to improve omnichannel capabilities.
All three Tapestry brands posted higher AUR, or average retail unit price, in the first quarter. For Coach, the company’s biggest brand, the first quarter marked AUR’s 10th consecutive quarter of growth in North America.
As more people return to in-person events and dress up in disguise, analysts believe companies with luxury and high-end offerings like Tapestry will benefit.
NKE – Nike
Jessica Ramirez of Jane Hali & Associates (JHA) said the supply chain challenges and factory closures that affected the footwear industry in 2021 will likely persist until 2022. However, she noted that the shoes would eventually regain their position of strength, thanks to strong demand for certain brands, notably Nike. While JHA is “neutral” on Nike, other analysts have expressed confidence in the brand’s outlook following its recent earnings report in December.
The sports giant reported higher than expected second quarter revenue and profit.
In a note to investors after the results were released, Williams Trading analyst Sam Poser gave Nike a ‘Buy’ rating and said that “the global health of the Nike brand has never been better and continues to grow. to improve “. In his analysis, he said he expects Nike “to gain market share, more profitably than its competitors in the short and long term.”
WMT – Walmart
Walmart, like other big box stores, has been a clear winner throughout the pandemic. In the company’s latest third-quarter earnings report, Walmart released earnings and earnings numbers that exceeded analysts’ expectations.
Walmart executives said the retailer has flexibility when it comes to allocating higher prices among categories, which allows for competitive but profitable pricing in a high inflation environment. Walmart has also been successful in weathering supply chain downturns by securing products early and chartering ships to prepare for the third and fourth quarters. Walmart also saw hiring gains amid widespread labor shortages in the retail industry, and added more than 200,000 new associates in the third quarter, executives said on a call with investors. 25% of these new hires were in supply chain positions, with the rest working in stores.
According to Neil Saunders, managing director of GlobalData, Walmart “will benefit from inflation and various investments in ranges and e-commerce”, making it a solid stock pick for the new year.
“The winners in 2022 will be companies that can create growth in addition to growth,” he said.
CPRI – Capri
According to Lyon, three themes will characterize the values that will do well in 2022: inventory availability, solid design and value proposition, and pricing power.
Capri Holdings, parent company of the Michael Kors, Versace and Jimmy Choo brands, fits into each of these themes, Lyon said. The company released strong quarterly results in November for the second quarter and raised its guidance.
Capri Holdings chief John Idol said on the company’s latest earnings call that prices at Michael Kors will continue to rise as promotions decline.
“We have shown that we earn more with lower sales than with higher sales and by trying to hunt ourselves or other competitors. So we’ve made the decision, the prices are going up, we’re going to have less promotional activity and we’re going to let the consumer react to that, ”Idol said.