Retailers are set to hire a record number of workers for the upcoming holiday season. Moreover, with strong consumer confidence, higher wages, and record low unemployment, an increasing number of Americans are willing to spend more.
Additionally, U.S. apparel retailers saw growth in same-store sales in August and are expected to maintain the momentum in the remainder of this year. Given the present circumstances, apparel companies seem like promising bets.
Holiday Season to Boost Apparel Sales
Per Challenger Gray Christmas, the oldest executive outplacement firm in the United States, American retailers are expected to hire at least 700,000 workers for the December holidays. It will mark the highest level of hiring since 2015.
Additionally, retail sales are expected to grow 5% to 5.6% from the prior season, per Deloitte’s annual holiday season forecast. Sales between November 2017 and January 2018 grew 5%, amounting to $1.05 trillion, per data from the Commerce Department. Meanwhile, Deloitte forecasts more than $1.10 trillion of retail sales this year.
According to research firm Retail Metrics, apparel retailers’ same-store sales advanced 6.2% in August. Same-store sales for apparel retailers are expected to increase only 5.3% in September and 5% in October, but roughly 6.2% in November and up to 8% in December.
Per market research company Statista, the 2018 growth forecast for the global fashion industry is between 3.5% and 4.5%, while that of North America is between 1% and 2%. Apparel spending in the United States alone is expected to be about $372 billion by 2020. U.S. apparel market size is projected to rise from $225 billion in 2012 to $285 billion in 2025.
Apparel Stocks on Strong Ground
The Zacks Shoes And Retail Apparel industry, part of the broader Zacks Consumer Discretionary Sector, has also outperformed the S&P 500 and its own sector over the past year. While the stocks in this industry have collectively gained 50.8%, the Zacks S&P 500 Composite and the Zacks Consumer Discretionary Sector have rallied 16.3% and 11.4%, respectively. Also, the industry currently carries a Zacks Industry Rank #37, placing it in the top 14% of more than 250 Zacks industries.
