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Tags: retail | stocks | economy | reopens

Bank of America: 4 Retail Stocks Will Do Best as Economy Reopens

Bank of America: 4 Retail Stocks Will Do Best as Economy Reopens
(Jpldesigns/Dreamstime)

By    |   Thursday, 30 April 2020 09:54 AM EDT

Bank of America said Burlington Stores, Ross Stores, Five Below and TJX Companies should benefit the most as economic lockdowns ease because of such stores aren’t located in malls.

“Stores located off-mall are likely to see early benefits from reopening as consumers avoid crowded malls,” Bank of America equity analyst Lorraine Hutchinson said in a note to clients, CNBC reported.

Some data would seem to support that there’s nowhere to go but up, especially in the consumer world, Bloomberg reported. Traffic across retail has fallen 98%, according to location-data provider Prodco Analytics. Restaurant researcher MillerPulse reported that same-store sales fell 83% at casual-dining chains in the last week of March.

However, mall based retailers are the most at risk as shoppers will likely opt for easier online or off-mall shopping environments, CNBC said, citing  Bank of America. The firm sees uncertainty for Macy’s, Nordstrom, Gap and American Eagle Outfitters.

“Opening a store will require bringing back furloughed employees and paying rent (for those who stopped while stores were closed),”  Hutchinson said. “We think in many cases, they will open because the increased ability to clear through excess inventory is crucial to not only improve working capital but also make room for Back to School and Fall inventory which will arrive mid-late summer.”

Only one-third of American adults surveyed April 20 said that they will feel safe shopping in a mall after stores reopen, according to a new study by retail predictive analytics company First Insight Inc.

More respondents said they’ll feel safe shopping in grocery, drug and big-box stores like Target (TGT) and Walmart (WMT) -- outlets that largely remained open during the outbreak to sell essential goods, Bloomberg said.

Even before the pandemic hit, mall owners were facing a dwindling numbers of shoppers. To tempt people back, some malls added elements like amusement parks, movie theaters and upgraded food courts -- just the types of crowded places that became off-limits when social distancing began.

To be sure, many retail chief executives on Wall Street hope shoppers will be ready to spend once economic lockdowns are lifted/

For example, the CEO of Starbucks Corp. says people are getting a bit “stir crazy.” His counterpart at Chipotle Mexican Grill Inc. says he sees “fatigue with cooking.”

Perhaps this is wishful thinking, or maybe pent-up demand will indeed give the economy a lift as the pandemic lockdown ends. Either way, Wall Street is hanging on to every offhand comment from corporate executives for clues as to when consumers will finally be ready to venture outside and open their wallets, Bloomberg said.

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StreetTalk
Bank of America said Burlington Stores, Ross Stores, Five Below and TJX Companies should benefit the most as economic lockdowns ease because of such stores aren’t located in malls.
retail, stocks, economy, reopens
429
2020-54-30
Thursday, 30 April 2020 09:54 AM
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