4 Stocks to Buy as In-Store Retail Sales Gather Steam

U.S. e-commerce sales have slowed down substantially this year. A major reason behind this is people visiting brick-and-mortar stores, which have seen steady growth in in-store purchases over the past few months.

E-commerce had played a major role in saving the retail sector during the peak of the pandemic but people are a lot more confident now and have once again started going back to the traditional mode of shopping. Given this scenario, retail stocks with a strong offline presence like Dollar Tree, Inc. DLTR, Canada Goose Holdings Inc. GOOS, Boot Barn Holdings, Inc. BOOT and J.Jill Inc. JILL are likely to benefit once again.

In-Store Sales Gather Pace

According to a new survey by 5WPR, 52% of the respondents said they would visit a physical store to find a product rather than searching and buying it online. Similarly, 72% of the people prefer eating out to ordering food online. This is one reason why despite the retail sales decline in May, sales at U.S. bars and restaurants jumped 0.7% month over month.

E-commerce had played a major role in saving the retail sector from a total collapse during the pandemic, with millions staying home and shopping online as physical stores remained closed. This saw online sales hit record highs throughout 2020 and 2021.

However, the love for brick-and-mortar stores started coming back as the economy started opening last year. Even then, many preferred shopping online as the Omicron and Delta variants of the coronavirus made them skeptical of visiting physical stores.

This year, things seem to have changed again. Although e-commerce has been playing a key role in supporting the retail sector, online sales have been declining, while in-store sales have been on the rise.

Retailers Depend on In-Store Sales

Although online shopping gained popularity during the pandemic, customers still prefer shopping at brick-and-mortar stores. This has seen several retailers opening new stores as the economy continues to reopen.

According to a report from Forrester, brick-and-mortar stores are projected to account for 72% of total retail sales in 2024.

Several retailers like DICK’s House of Sport, a wing of DICK'S Sporting Goods, Inc. DKS are also trying to innovate by introducing additional space within the store where customers can try out new equipment.

Also, many retailers believe that online stores are an extension of brick-and-mortar stores and are introducing services like buy online, pick up in store or buy online, return to store. E-commerce is going to stay because people have finally realized its benefits but that is unlikely to hamper in-store sales.

This is the reason why traffic and sales at brick-and-mortar stores are once again growing. The Commerce Department said last month that online sales grew a meager 2.4% in the first quarter of 2022 after a great 2020.

Our Choices

Given the situation, it would be ideal to invest in retail stocks with a strong offline presence. We have shortlisted four restaurant stocks, each carrying a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar Tree, Inc. is an operator of discount variety stores offering merchandise and other assortments. DLTR’s stores successfully operate in major metropolitan areas, mid-sized cities and small towns. Dollar Tree offers a wide range of quality everyday general merchandise in many categories, including housewares, seasonal goods, candy and food, toys, health and beauty care, gifts, party goods, stationery, books, personal accessories, and other consumer items.

Dollar Tree’s expected earnings growth rate for the current year is 40.5%. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. DLTR carries a Zacks Rank #1.

Boot Barn Holdings, Inc. operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. BOOT’s products include boots, denim, western shirts, cowboy hats, belts and belt buckles, and western-style jewelry and accessories. Boot Barn sells its products through bootbarn.com, an e-commerce Website.

Boot Barn Holdings’ expected earnings growth rate for the current year is 4.4%. The Zacks Consensus Estimate for current-year earnings has improved 18.4% over the past 60 days. Boot Barn Holdings sports a Zacks Rank #1.

Canada Goose Holdings Inc. is a global outerwear brand. Canada Goose is a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children. GOOS’ jackets are sold in 36 countries around the world, including in two owned retail stores and four e-commerce stores.

Canada Goose’s expected earnings growth rate for the current year is 64.4%. The Zacks Consensus Estimate for current-year earnings has improved 6.7% over the past 60 days. GOOS carries a Zacks Rank #2.

J.Jill, Inc. operates as a specialty retailer of womens’ apparel. JILL offers sweaters, tops, pants, dresses, shorts, skirts, sleepwear and accessories. J.Jill markets through retail stores, website and catalog.

J.Jill’s expected earnings growth rate for the current year is 25.4%. The Zacks Consensus Estimate for current-year earnings has improved 19.2% over the past 60 days. JILL carries a Zacks Rank #1.

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