Zacks Industry Outlook DICK'S Sporting Goods, Five Below, Sally Beauty and BARK

For Immediate ReleaseChicago, IL – December 30, 2024 – Today, Zacks Equity Research DICK'S Sporting Goods, Inc. DKS, Five Below, Inc. FIVE, Sally Beauty Holdings, Inc. SBH and BARK, Inc. BARK.Retail-Miscellaneous Industry 2025: 4 Stocks to Add to Your WatchlistIndustry: Retail – MiscellaneousLink: https://www.zacks.com/commentary/2388690/retail-miscellaneous-industry-2025-4-stocks-to-add-to-your-watchlistAs we step into 2025, the Retail – Miscellaneous industry remains at a crossroads, shaped by persistent challenges and evolving opportunities. Shifting consumer preferences and intense competition are expected to continue influencing market dynamics. Inflationary pressures, while easing slightly in recent months, still weigh on consumer spending, leading to cautious purchasing behavior across various merchandise categories. Rising operational costs, including wages and input prices, are likely to remain a concern in early 2025. For the industry to gain momentum, restoring consumer confidence and purchasing power will be pivotal, alongside strategic innovations and operational efficiencies that can set the tone for a more resilient year ahead.The industry participants are addressing the changing consumer environment by emphasizing a superior product strategy, enhancing their omnichannel capabilities and making prudent capital investments. Backed by these initiatives, companies such as are well-positioned to seize opportunities that may arise in this changed marketplace.About the IndustryThe Zacks Retail – Miscellaneous industry encompasses a diverse array of retailers, including those specializing in sporting goods, office supplies, specialty products and domestic merchandise. It also features beauty product retailers offering cosmetics, fragrances, skincare, haircare and salon styling tools. The industry also includes rural lifestyle stores, art and craft specialty outlets and suppliers catering to farmers, ranchers, tradesmen and small businesses. Recreational boat and yacht retailers, along with specialty value retailers targeting tween and teen customers, are also key players. Profitability within this sector hinges on a balanced pricing strategy, efficient supply chain management, effective merchandising tactics and continuous innovation to meet consumer demands and maintain competitive positioning in a dynamic market.4 Key Industry TrendsSoft Demand May Hit Revenues: The effects of inflation and geopolitical concerns continue to impact consumer spending activity, which is crucial for the retail sector. The industry's outlook heavily relies on consumer purchasing power, now strained by higher prices that are putting pressure on family budgets and dampening demand. This situation is further compounded by a decline in U.S. consumer confidence. According to the latest data from the Conference Board, the index plummeted to 104.7 in December, a sharp drop from November's upwardly revised figure of 112.8. The Federal Reserve’s outlook for fewer rate cuts, along with potential shifts in tariff policies under the new regime and other geopolitical challenges, hurt consumer sentiment. The Present Situation Index, which evaluates consumer views on current business and labor market conditions, also fell by 1.2 points to 140.2.Pressure on Margins to Linger: Companies in the industry are competing on price, product variety, and speed to market. To gain a competitive edge, they have been accelerating investments to strengthen the digital ecosystem and enhance shipping and delivery capabilities. While these efforts drive sales, they also incur high costs. Any deleverage in the SG&A rate, higher labor and occupancy costs, and increased marketing and store-related expenses may continue to pressure margins. Nonetheless, companies are focused on initiatives to mitigate cost-related challenges, such as streamlining operational structures, optimizing supply networks and adopting effective pricing policies.Focus on Boosting Portfolio & Market Reach: Most companies in the sector are focused on expanding their product assortment, enhancing the online shopping experience and adopting favorable pricing strategies to boost sales. Key initiatives include building robust omnichannel operations, introducing reward programs, and developing innovative products and services. There's a noticeable increase in demand for personal care items, domestic merchandise and fitness-related products. To capitalize on these trends, companies are leveraging targeted marketing efforts to fuel sales and broaden their market reach.Digitization, Key to Growth: With the shift in consumer shopping patterns and behavior, industry participants have been balancing in-store and online roles. Companies are increasingly directing resources toward digital platforms, accelerating fleet optimization and enhancing their supply chains. Initiatives to expand delivery options, such as curbside pickup and ship-to-home orders, along with contactless payment solutions, have proven beneficial. Retailers are also investing in store renovations, improved checkouts and mobile point-of-sale capabilities to keep physical stores relevant. By focusing on consumers' product preferences and their inclination toward online shopping, retailers are replenishing shelves with in-demand merchandise and ramping up investments in digitization to drive growth.Zacks Industry Rank Indicates Bleak ProspectsThe Zacks Retail – Miscellaneous industry is housed within the broader Zacks Retail – Wholesale sector. The industry currently carries a Zacks Industry Rank #180, which places it in the bottom 28% of roughly 250 Zacks industries.The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates drab near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are losing confidence in this group’s earnings growth potential. Since the beginning of July 2024, the industry’s earnings estimate has declined by 6.1%.Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry vs. Broader MarketThe Zacks Retail – Miscellaneous industry has underperformed the broader Retail – Wholesale sector and the Zacks S&P 500 composite over the past year.The industry has advanced 8.4% over this period. Meanwhile, the S&P 500 has risen 27.4%, and the broader sector has jumped 30% in the said time frame.Industry's Current ValuationOn the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing retail stocks, the industry is currently trading at 18.43X compared with the S&P 500’s 22.66X and the sector’s 25.18X.Over the last five years, the industry has traded as high as 22.51X, as low as 11.09X and at the median of 16.84X, as the chart below shows.4 Stocks to WatchFive Below: Five Below’s strategic focus on customer-centric innovation and operational efficiency positions the company for long-term growth. The company is enhancing its product offerings and store experience to appeal to its core demographic. The introduction of Five Beyond and continued investment in labor and supply chain management are key initiatives driving customer satisfaction and operational improvement, ensuring Five Below remains competitive in the value retail sector. These efforts position the company for sustained growth.Five Below has a trailing four-quarter earnings surprise of 39%, on average. The Zacks Consensus Estimate for Five Below’s current financial-year revenues suggests growth of 8.5% from the year-ago reported figure. Shares of this Zacks Rank #2 (Buy) company have declined 47.4% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.BARK: The company is poised for robust growth and improved profitability, driven by a multi-faceted approach to its business model that includes the expansion of product offerings and deepening market penetration. The notable growth in its commerce segment, particularly through strategic partnerships with leading retailers like Amazon and Chewy, underscores strong consumer demand for its innovative products. BARK's unique initiative, BARK Air, has introduced an innovative service aimed at dog owners, allowing them to travel with their pets.The Zacks Consensus Estimate for the current financial year's top and bottom lines implies growth of 2% and 81.8%, respectively, from the year-ago reported figure. Shares of this Zacks Rank #2 company have surged 130.9% in the past year.DICK'S Sporting Goods: The company has successfully positioned itself for sustained growth by focusing on an integrated approach that combines innovative retail experiences with strong digital engagement. The company’s investment in next-generation store formats like House of Sport and its growing digital ecosystem, including platforms like GameChanger, highlight its ability to adapt to the evolving retail landscape. By offering a comprehensive omnichannel experience, DKS is effectively meeting the needs of modern consumers, enhancing customer loyalty and driving long-term growth.DICK'S Sporting Goods has a trailing four-quarter earnings surprise of 11.4%, on average. The Zacks Consensus Estimate for current financial-year revenues and EPS suggests growth of 2.4% and 7.5%, respectively, from the year-ago reported figure. Shares of this Zacks Rank #3 (Hold) company have rallied 59.5% in the past year.Sally Beauty: Sally Beauty’s focus on customer engagement, innovation and brand evolution positions it for sustained growth. Through initiatives like Licensed Colorist OnDemand and partnerships with major digital platforms, the company strengthens its consumer connections and broadens its market reach. The introduction of new products and collaborations keeps Sally Beauty ahead of trends, while the upcoming brand refresh and store redesigns aim to enhance the customer experience. With a focus on high-margin brands and operational improvements, Sally Beauty is well-positioned for long-term growth and profitability.Sally Beauty has a trailing four-quarter earnings surprise of 3.7%, on average. The Zacks Consensus Estimate for current financial-year revenues and EPS suggests growth of 1.1% and 9.5%, respectively, from the year-ago reported figure. Shares of this Zacks Rank #3 company have declined 16.9% in the past year.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report DICK'S Sporting Goods, Inc. (DKS): Free Stock Analysis Report Sally Beauty Holdings, Inc. (SBH): Free Stock Analysis Report Five Below, Inc. (FIVE): Free Stock Analysis Report BARK Inc. (BARK): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks