An increase in discretionary spending on the back of solid job growth has helped the retail industry outperform the broader market year-to-date. And because this trend will likely continue, we believe popular retail stocks Signet Jewelers (NYSE:SIG), Boot Barn Holdings (NYSE:BOOT), and Tilly’s (TLYS), which have returned more than 90% so far in 2021, should continue advancing. Let’s discuss.Following months of rising customer foot traffic in retail stores earlier this year, the re-imposition of mask mandates by the CDC amid rising COVID-19 cases will likely shift consumers’ focus back to online shopping. Nevertheless, with most retail companies establishing an online presence last year to remain operational, the latest COVID-19 spike is expected to have a limited impact on this industry.
Retail companies have been benefiting from robust consumer spending thanks to strong job growth. Former Macy’s CEO Terry Lundgren said that prevailing inflation rates should benefit the apparel industry after nearly a decade of stagnant growth.
Overall, retail stocks have been gaining momentum owing to strong consumer spending. This is evident in the SPDR S&P Retail ETF’s (XRT) 51.6% gains year-to-date, versus the broader SPDR S&P 500 Trust ETF’s (SPY) 18.7% returns. Therefore, we think retail stocks Signet Jewelers Limited (SIG), Boot Barn Holdings, Inc. (BOOT), and Tilly’s, Inc. (TLYS), which have gained more than 90% year-to-date, still have plenty of upsides to deliver..