2 More Retail Stocks Point to Happy Holidays Ahead

Strong share-price gains suggest a resilient consumer.
Investors have been concerned about the state of the U.S. economy lately, with particular attention to ailing consumers. With high inflation eating away at the purchasing power of their earnings, consumers have had to make some difficult financial decisions, and that has weighed on investor sentiment about the prospects for the companies that serve those consumers.
Yet on Tuesday morning, stock markets moved modestly higher, and the retail sector had a lot to do with the better mood on Wall Street. Strong quarterly financial results from Abercrombie & Fitch (ANF 16.48%) and Best Buy (BBY 9.51%) not only sent their respective shares soaring but also set a more positive tone for the key holiday shopping season. You can find the details below.
A&F gets an A
Abercrombie & Fitch saw its stock jump 19% early Tuesday, as investors digested the teen and young-adult apparel retailer’s third-quarter financial report for the period ending Oct. 29. The numbers indicated A&F’s continued recovery from the shutdowns of the pandemic and inspired some optimism about the coming months.
Key business metrics were mixed. Revenue of $880 million was down 3% year over year, with the strong U.S. dollar proving largely responsible for the decline. Higher freight and materials costs were major contributors in sending gross margin levels down 4.5 percentage points to 59.2%, and adjusted earnings dropped to just $0.01 per share, down from $0.86 in the year-earlier period. But investors were actually surprised to see any profit at all, having expected losses even on an adjusted basis.

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