Retail Sector Ideas

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Casey’s General Stores -- >>> The fastest-growing retailers


Aug 20, 2013


http://money.msn.com/top-stocks/post--the-fastest-growing-retailers


New data illustrates which stores have proven resilient to headwinds, and which are poised to take an even larger market share next year.

Though Macy’s (M +1.67%) and Wal-Mart (WMT -0.05%) blamed their weak Q2 earnings on reasons ranging from a shaky economy to payroll tax cuts to a hesitancy of non-essential spending by consumers, some retailers are still flourishing -- including those you may never have considered, or even heard of.

Here are some of this year's Top 100 Hottest Retailers, as ranked by year-over-year percentage sales growth, and based on Kantar Retail data provided by the National Retail Federation.

Grocery

On its recent Q2 earnings call, Wal-Mart U.S. CEO Bill Simon cited nearly $1 billion in growth for the quarter in the store’s grocery sales (which includes food and consumables), in part thanks to efficiencies in transporting the product from farm to shelf.

Though the numbers are promising, the grocery business represents a $450 billion opportunity and one that Bryan Gildenberg, chief knowledge officer at Kantar Retail, says tends to be "a bit of a mirror as to what is happening in retailing in general."

In its data, Kantar recognizes the latest sign of healthy demand for natural foods retailers, particularly with 62% year-over-year sales growth seen in specialty grocers like Sprouts Farmers Market (SFM -1.20%) (whose shares have more than doubled after the initial public offering on August 1), and The Fresh Market (TFM +0.43%), a North Carolina-based chain that has 129 locations in the United States, and has experienced 20% year-over-year sales growth.

If consumers begin to prefer such niche specialty retailers over larger brands like Whole Foods Market (WFM +0.46%) (ranked No. 21 on the list) and Kroger (KR +0.37%) (No. 84), these up-and-comers may in fact be poised to capture an even larger share of the market. That said, Amazon’s (AMZN +1.27%) latest move into grocery delivery service with Amazon Fresh (currently available only in Los Angeles and Seattle markets) might prove to be an even more significant game-changer for the grocery segment as a whole.



Apparel

Though Nordstrom (JWN +1.83%) recently cut its full-year earnings outlook, the company reported second-quarter profits rose from $156 million a year earlier to $184 million this year, signaling a positive sign for higher end retail.

Likewise, Kantar’s top 100 list includes both established and up-and-coming brands in this category. With 63% year-over-year sales growth, Michael Kors Holdings (KORS +2.55%) takes the No. 2 spot on Kantar’s Hot 100, with J.Crew ranking at No. 12, and Ralph Lauren (RL +1.87%) at No. 23. Lifestyle and active wear brand Lululemon Athletica (LULU +2.60%) takes the No. 4 spot for growth, despite its recent scandals -- including its sheer yoga pants debacle and the subsequent investor class action lawsuit regarding this matter. Whether the No. 5-ranked Under Armour (UA +1.12%) will capture customers in the wake of Lululemon's fallout (or whether loyal Lululemon customers are even swayed by these events) remains to be seen; the company's shares gained 24.63% in the last three months.

Foot Locker (FL +2.82%) and Dick’s Sporting Goods (DKS -6.50%) ranked at No. 29 and No. 32, respectively, for positive year-over-sales growth. Genesco (GCO +1.57%), the parent company of retail store brands like Lids and Journeys, ranked at No. 91 with 6.2% year-over-year sales growth. Whether due to price-sensitive fashion lovers, a rocky economy or a combination of these two factors, brands like H&M (HMRZF) at No. 8 on the list, Rue 21 (RUE) at No. 13, and Chicos (CHS +2.67%) at No. 16, all had double-digit year-over-year sales growth.

TJX (TJX +5.83%), parent company of four separate segments including Marmaxx, HomeGoods, TJX Canada, and TJX Europe, ranked No. 34.



Tech/Online

A list of the hottest retailers wouldn’t be complete without Apple Stores/iTunes (AAPL -0.57%) and Amazon, which were ranked No. 5 and No. 7, respectively, for positive year-over-year sales growth. Names like AT&T Wireless (T +0.77%), which was recently ranked first place for "overall purchase experience" among wireless service providers in a J.D. Power Wireless Purchase Satisfaction Study, also earned accolades at the No. 17 spot on the Hot 100. Verizon Wireless (VZ +0.97%) ranked No. 71 with 7.6% year-over-year sales growth.



Convenience and discount club stores

Gildenberg predicts that club, drug, and dollar stores will continue to be successful in the next few years, though the competitive advantage will be found in those who remain successful in curating quality products and offering a high level of customer convenience.

Kantar’s list includes major players like Costco (COST +0.98%), ranked No. 42; Dollar General (DG -0.37%), which came in at No. 62; CVS Caremark (CVS +1.71%), which ranked at No. 83; and lesser established brands like Iowa-based Casey’s General Stores (CASY +0.67%), which ranked No. 74 with 7.6% year-over-year sales growth; and retailer-owned cooperative, ShopRite, which was ranked No. 90.

Particularly in the wake of health care industry reform, which could amount to a $15 billion boost in prescription medicine spending by consumers, this is one segment that may change dramatically in the next few years and boost smaller retailers onto a whole new playing field.

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