NEW YORK (TheStreet) -- If back-to-school provides any insight into the upcoming holiday season, it is poised to be a very merry Christmas for some retailers.
Looking at the traditional back-to-school period, which stretches from July through September, TheStreet found several retailers came in at the top of the class. Given that back-to-school winners are usually indicative of holiday winners, this elite group of retailers is worth noting. "As many investors use fall as a gauge for holiday, we believe interest in the group could be on the rise," UBS analyst Roxanne Meyer, wrote in a note.
Department stores, from both the low-to-high end dominated the list, as the sector has experienced a steady rebound over the past six months. Teen retailers, which are generally a barometer of discretionary spending, also had a strong finish.
The final month of the back-to-school season should have served to ease the fears of those investors who predict a double-dip in consumer spending, says Brean Murray analyst Eric Beder. In September, retailers were up against some of the toughest comparisons of the year, and were still able to post significant gains, a positive sign of the momentum heading into holiday.But back-to-school came later this year, with shoppers procrastinating until classes started before picking up fall items. Similarly, holiday spending might not kick-off with a big bang on Black Friday, with shoppers waiting until closer to Christmas to find the best deals, says Wall Street Strategies analyst Brian Sozzi. Back-to-school was also driven by high levels of discounting, particularly in the teen space. Average unit retail was down in the double digits among most of the mall retailers in September, and was noticeably more promotional this year than last year, says Janney Capital Markets analyst Adrienne Tennent. All of this is largely predicated on the fact that inventory levels are higher this year, as retailers bulked up on merchandise during the first-half of the year following a wave of consumer optimism. But that upbeat sentiment has come and gone, and inventory for the holiday season, which is generally purchased up to nine months in advance, will remain heavy. "Without creative, deep promotions, retailers won't come out on top [this holiday]," Sozzi predicts. Ahead of the holiday season, it looks like October and November may be soft, as it is becoming evident that consumers will only shop when there is a catalyst. Wet Seal (WTSLA), among other retailers, said while sales were robust in the beginning of September, during peak back-to-school, traffic dropped off once the shopping season ended. So which retailers will retain this momentum? Read on to see which retailers are most likely to turn their back-to-school success into holiday sales....
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV