The pandemic has been difficult for retail stocks. When lockdowns were announced, high streets were deserted and companies in the retail sector really suffered. I wrote about one company, Shoe Zone, just last week as it looks to be rebounding from the worst of the pandemic.
Here are three other retail stocks that I think are worth considering for my portfolio.
Card Factory
Card Factory (LSE: CARD) is a retail stock very similar to Shoe Zone. Only here, CARD sells commemorative products through its chain of over 1,000 stores. The company outlines its strategy as being the first choice for greeting cards.
It released a trading statement in November showing that sales continue to recover from the pandemic. Customers are spending more, with like-for-like basket values up 22.5% on a two-year comparison. However, transaction numbers are down 20.9%. I think this shows customers are still wary about shopping in stores, but are willing to spend more money if they do. Therefore, another lockdown would severely impact the business.
The reason I think this stock could do well over December is that the company says its customers are responding well to its Christmas ranges. Indeed, CARD has accelerated the third phase of its festive products.
There’s a good chance CARD will trade well over December, lockdowns aside. I’m considering buying the shares.
An online retail stock
Boohoo (LSE: BOO) is retail stock I’ve owned for a number of years now. It offers affordable and fashionable clothing on its websites. I first bought the shares at close to 30p, but recently the company has suffered from accusations of workers’ rights issues, and cost pressures.
In fact, this year alone the share price is down over 44%.
In September, the company hit record first half sales of £976m, but profit fell 5% compared to the previous period. And there was an extra £26m of expenses due to freight and logistics cost inflation.
The supply chain disruptions that businesses are experiencing are clearly a risk for Boohoo going forward. But I think the share price has fallen to a level that makes the company a buy for me again. On a price-to-earnings ratio, the shares are priced at a multiple of 20.
There’s a good chance that customers will spend more on festive outfits this year as last Christmas and New Year were hit by lockdowns. The shares are a buy for my portfolio.
A DIY retail stock
The last stock is Kingfisher (LSE: KGF), the owner of B&Q, Screwfix and TradePoint in the UK, and Castorama and Brico Depot in France. It’s the second-largest DIY retailer in Europe.
The share price reacted badly to a trading update last week and fell over 5%. However, sales were strong compared to two years ago before Covid. Market share gains are continuing too. Pre tax profit was guided to be towards the higher end of the company’s previous forecast.
I think this share could do well heading into the festive period. With holidays abroad restricted more than normal this year, consumers may look to improve their homes, and Kingfisher would stand to benefit.
Some caution must be noted if there’s another lockdown that leads to store closures. But I’m optimistic about this share heading into December. It’s a buy for me.
Dan Appleby owns shares of boohoo. The Motley Fool UK has recommended Card Factory and boohoo group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
This post was originally published on Motley Fool
