Many investors will be keeping an eye on trends in the retail industry from Thanksgiving Day through Cyber Monday. Retailers like Walmart (WMT), Costco (COST), Kohl’s (KSS), and Amazon (AMZN) are looking to take advantage of the holiday period. . The fourth quarter of the calendar year is typically expected to be a seasonally strong quarter for the retail industry.
According to the National Retail Federation (NRF), an estimated 182 million people may shop in-store or online during this holiday period. NRF forecasts that retail spending is expected to reach record levels in November and December, increasing 3% to 4% year over year and totaling $957.3 billion to $966.6 billion, respectively.
But there are also concerns that inflation (3.2% annual rate as of October), rising interest rates and the resumption of student loan payments are dampening shoppers’ moods.
Aspiring luxury retailers could experience some exits
Many analysts believe that Nordstrom (JWN) and Tapestry may see a rebound in retail spending during the holidays, as aspiring luxury shoppers don’t exactly fall into the traditional luxury income bracket.
In fact, Tapestry CEO Joanne Crevoiserat said on a recent earnings call that “aspirational consumers are under relatively more pressure.”
…Value retailers could be winners.
As shoppers grapple with inflation, many Wall Street analysts predict they will look for value, compare prices and value convenience. Oliver Chen, TD Cowen’s top-rated analyst, says Wal-Mart is the retailer that could win this race.
Chen said the retail giant has done a “really great job” in terms of competitive pricing and a seamless shopping experience. Despite the decline in his WMT stock price after Q3 results, Chen sees the company as well-positioned heading into the upcoming holiday season. WMT stock has fallen 1.4% over the past three months.
The analyst has a Buy rating and a $188 price target, suggesting 21.5% upside potential at current levels.
Is Walmart stock a buy or a hold?
Analysts remain bullish on WMT stock, with a consensus rating of Strong Buy based on 25 buys and 5 holds. WMT’s average price target of $180.79 means it has 16.1% upside potential at current levels.