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Retail sales in the United States unexpectedly increased 0.7 % sequentially in September 2021, following an upwardly revised 0.9% gain in August, beating market forecasts of a 0.2% decline. Consumer spending makes up about 70% of U.S. economic activity. Thus, any massive jump in it will likely brighten the economic growth picture.
Below we highlight a few areas and the related ETFs that benefited handsomely.
Miscellaneous Store Retailers
Sales grew 1.8% sequentially in September and 21.4% year over year. Plus, sales at Sporting Goods, Hobby, Musical Instrument, & Book Stores surged 3.7% sequentially and 14.2% year over year.
If job data remains stable and rates remain low, consumers may continue to splurge on activities. The holiday season could act as another tailwind. However, volatility should remain in place on COVID fear.
Consumer Discretionary Select Sector SPDR ETF XLY thus looks to be a great pick. The underlying Consumer Discretionary Select Sector Index of the fund seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index.
Coming to stocks, DICK’S Sporting Goods Inc. DKS, with a Zacks Rank #2 (Buy), operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, tennis, golf, water sports, etc.
Clothing
Many mall-based clothing stores were closed amid lockdowns last year. So, pent-up demand boosted spending in this segment. Apparel and accessories sales skyrocketed 1.1% sequentially in the month and 22.4% year over year. Apparel Retail takes about 19.3% of the fund SPDR S&P Retail ETF XRT. The fund is thus well-positioned to benefit from the trend.
For a single-stock selection, Zacks Rank #1 (Strong Buy) Buckle Inc. BKE appears a nice bet here. It is a leading retailer of medium to better-priced casual apparel, footwear, and accessories for fashion-conscious young men and women.
Non-Store Retailers
Sales of this category rose 0.6% sequentially. Year over year, sales were up 10.5%. Consumers’ interest in buying products online amid rising virus cases kept the demand high for the segment.
ProShares Online Retail ETF ONLN is a good bet to tap the winning trend of non-store retailers. The underlying ProShares Online Retail Index is a specialized retail index, tracking retailers that principally sell online or through other non-store channels. The fund charges 58 bps in fees.
The Zacks Rank #1 Revolve Group Inc. RVLV is an e-commerce fashion company. It markets and sells men’s and women’s designer apparels, shoes and accessories.
General Merchandise Store
Sales gained 2% sequentially in the month and 13.2% year over year. Sales at department stores gained 0.9% sequentially and 18.9% year over year.
Walmart Inc. WMT has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. The stock has a Zacks Rank #1.
VanEck Retail ETF RTH tracks the overall performance of companies involved in retail distribution, wholesalers, on-line, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. It charges 35 bps in fees.
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Walmart Inc. (WMT) : Free Stock Analysis Report
DICK’S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
Buckle, Inc. The (BKE) : Free Stock Analysis Report
SPDR S&P Retail ETF (XRT): ETF Research Reports
VanEck Retail ETF (RTH): ETF Research Reports
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
ProShares Online Retail ETF (ONLN): ETF Research Reports
Revolve Group, Inc. (RVLV) : Free Stock Analysis Report
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Zacks Investment Research
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