Costco – Here’s What to Expect From Major Retailers in the New Year
A new year is thankfully in sight. Still, the ghost of 2020 will likely still loom large for retailers.
The pandemic could remain a major factor for at least the first half of 2021. Even when the Covid-19 threat fades, its impact on companies and their shoppers will likely remain. Telsey Advisory Group’s Joseph Feldman looked at a number of major retailers Monday, highlighting what he believes will be key strategic initiatives and investments for major retailers in the new year.
(ticker: AMZN), he noted the behemoth with a 78% year-to-date rally under its belt will continue to focus on building out its ecosystem to further expand market share in an increasing number of categories from fashion to home and pharmacy. New fulfillment centers should facilitate faster delivery, a feature the company built its Prime membership around but has faced delays given pandemic-related constraints.
(COST), whose shares have gained 26% this year, “should continue to win member trust and share of wallet by highlighting value,” Feldman said. He’s most interested in 20-some new stores that should come online in the U.S. and abroad next year, and the company’s commitment to building out its digital platform, including offering online-only products as it has seen huge growth in online sales throughout the Covid crisis.
(HD), up 24% this year, is likely to remain locked onto its Pro division that caters to professionals rather than the do-it-yourself crowd by expanding tool rentals and introducing new brands, Feldman wrote. That business has long been a winner for the home improvement retailer. Feldman is also upbeat about Home Depot’s recent acquisition of HD Supply, which he believes will help it grow market share in maintenance and repair.
Market share will also be in focus for
((LOW)), up 35% year to date, he wrote, as it too tries to grow its Pro business. It will also look to improve its installation services business and merchandise assortment, and enhance its digital platform and take greater advantage of data.
(NKE) shares have climbed 40% in 2020. The apparel giant will likely continue to pare down its weaker third-party partners next year, as it has moved away from department stores like Belk’s and
(DDS) this year, while continuing to grow its high-margin, direct-to-consumer online business. Women’s and apparel remain categories where it could expand its reach, and new sneaker launches will continue to be a key component, he notes.
(TGT), up 38% this year, looks poised to gain market share next year and beyond, Feldman wrote, helped by an aggressive focus on pricing, expanding its stable of popular private brands, working with other key players—from
(DIS) to Ulta Beauty (ULTA)—and upgrading its digital capabilities.
(WMT), which has gained 22% year to date, will be looking to build out its Walmart+ subscription service, he noted, while also bulking up its third-party marketplace that includes goods from other sellers, and expanding into higher-margin categories, from beauty and fashion to home goods. It also has its eye on key overseas markets, from Canada to China.
Feldman has Outperform ratings on all the aforementioned stocks. He has a $4,000 price target on Amazon, $430 on Costco, $325 on Home Depot, $215 on Lowe’s, $175 on Nike, $190 on Target, and $162 on Walmart.
Write to Teresa Rivas at [email protected]
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