Bank of America projects a slowdown in holiday spending this year - and singles out 3 retailers that could outperform the trend
- Holiday season spending is set to slow this year due to warmer weather, a shorter holiday, increased inventory, and trade-war tariffs, Bank of America Merrill Lynch analysts wrote Monday.
- The US consumer "remains strong" despite economic warning signs, they added.
- Aaron's, Burlington, and Target should outperform the retail industry should spending slow through the fourth quarter, the analysts projected.
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Holiday season spending is poised to slow this year, according to Bank of America Merrill Lynch.
Tariffs, warmer weather, a shorter holiday season, and increased inventory would all be to blame for weaker sales, the bank's analysts wrote in a Monday note. The bank projected same-store sales to grow by 2.7% in the fourth quarter, down from 3.8% last holiday season.
Online sales growth and weakening consumer demand also threaten retailers this holiday season, UBS analysts wrote in a September 23 note. E-commerce sales growth hit a six-year high in 2019 after surging 25%, according to the bank.
The US consumer "remains healthy" despite growing fears of economic recession, the team of BAML analysts said. Should the retail industry face a holiday headwind, certain value stores could benefit from discount-seeking customers, they added.
Here are the three companies BAML expects to outperform the retail industry this holiday season.