NEW YORK ( TheStreet) -- Safety in retail stocks is a bit of an oxymoron.
The sector has been wrought with fear, as sales fell in May for the first time in 11 months, and the companies face rising sourcing costs and shaky consumer sentiment.
But relatively speaking, the best place to ride out this summer's inflationary pressures is in luxury, according to analysts.
Goldman Sachs' U.S. luxury department store same-store sales index increased 13.2% in May, a significant acceleration for March/April trends of 7% to 8% and February's 11.8% increase."The acceleration is likely a function of higher input costs being passed on to the customer, with little to no corresponding offset in units," Goldman analyst Andrianne Shapira wrote in a recent research note. "This is in stark contrast to the mid-tier, which is seeing units decline as average unit retail rises." Luxury valuations are also at a historical premium, trading 20% above long-term averages, as the market drives a wedge between the high and low end. "Our analysis suggests that the higher income customer is better suited to absorb inflation across apparel, food and fuel, and the luxury premium is reflective of this," Shapira wrote. Read on for a look at the luxury stocks best positioned for the summer's headwinds.
Select the service that is right for you!COMPARE ALL SERVICES
- $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
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV