And, with the country’s jobs market looking better with a declining unemployment rate, this should help to drive consumer confidence and the desire to spend in the retail sector. This is critical as every dollar spent creates jobs and additional spending down the road—a term known as the “multiplier effect” in economics.
Think about it this way. You go out to a restaurant and have a good meal. The restaurant attracts business, so it can remain in business and hire workers. The waiter you tip also has extra income to spend on goods and services. The waiter then goes and buys a shirt at the department store. The sales clerk ringing in the sale earns a wage and possible commission on the shirt. In turn, he or she goes out and spends and so on; hence the importance of the multiplier effect. Some economists estimate that each dollar initially spent can generate up to $7.00 in consumer spending in the retail sector, which is why it’s critical that consumers spend to get the economy going.
I cannot say I’m a big supporter of the retail sector, but the conditions have improved and will likely get better. The retailers are showing growth in spite of flat economic renewal. And whether they are big-box stores, discounters, or luxury retailers, there really is no specific area of the retail sector. Take a look at higher-end clothing retailer Michael Kors Holdings Limited (NYSE/KORS). The stock surged over 20% on Tuesday after posting a 68% year-over-year jump in its fiscal third-quarter revenues to $373.6 million versus $222.5 million in the year earlier fiscal third quarter. The jump is amazing given the uncertainties in the retail sector. Moreover, the key comparable same-store sales surged a superlative 38% in the quarter, which is simply astounding for a retailer.
Another retailer that I have been following for years that has also made numerous investors rich is fashion watchmaker Fossil, Inc. (NASDAQ/FOSL). I had initially recommended Fossil at the $20.00 level a few years ago. The stock traded at a record high of $134.98 on July 20, 2011, before retrenching to $69.57 on August 9, 2011. Buying over the last six months has been impressive, as the stock traded around $114.00 on Tuesday.
The key to investing in the retail sector is to search for companies that offer some sort of niche or a product that is differentiated from its competitors. I also like to look at retailers that may be currently in the dumps with investors, but that have strong brand awareness.
Another area that I like given the upcoming debut of Facebook is the social networking space, which I discussed in China’s Next Potential Moneymaker.
READ MORE : http://www.profitconfidential.com/
www.profitconfidential.com/
- Author Articles
- More From This AuthorThe stock market is holding up well and it has performed strongly since the beginning of the year. I don’t want to rain on its parade, but I do want to mention that Street analysts have been quietly...Copper prices, as well as all precious metals, have bounced strongly off the lows last year and there are many signs that this move up is only the beginning of the move that will push up mining...There are many reasons to be skeptical about this past January’s market rally. One of the most important key indicators flashing a warning sign is the fact that the stock market’s big rise in January...If the S&P 500 Index consolidates around the 1,350 level, then I think it’s fair to argue that the stock market is appropriately valued given all the information we have right now. I’m thinking that...The bulls have been good to us so far in 2012. The stock market continues to show optimism; the key stock indices are displaying a “golden cross, with the 50-day moving average (MA) above the 200-day MA. ...
- Related Articles
- Related ArticlesWhy would you want a coconut meat removal tool? Because coconut meat is a superfood. Coconut meat is full of fiber, antioxidants, minerals, and vitamins, yet tit still tastes great – could there be an...On the daily, Emma Katharine Ranniger, a Western Washington University senior, strides effortlessly through campus, impeccably dressed. From a 20-minute chat over tea, I found she is not only tailored in...Every day people are injured through no fault of their own. Negligent drivers, defective products, slip and fall accidents and many more accident and injury scenarios cause people to suffer pain or even result...Every American citizen dreams of owning a home one day. That is why most people save a part of their income every month all in an effort to accumulate sufficient savings to make a deposit on a mortgage....The Health Information Technology for Economic and Clinical Health (HITECH) Act, part of the American Recovery and Reinvestment Act (ARRA), put forward new modifications for HIPAA privacy and security rules in...
- Latest Articles
- Latest ArticlesJuly to September is one of the busiest periods of the calendar year with summer holidays taking place in many of the European countries. With various charms to offer, USA never fails to entice people to grab...The photographer must demonstrate competence. Evidence of competence will result in repeat business and higher orders. One of the ways to demonstrate competence to be well prepared for every photo shoot taken....Why would you want a coconut meat removal tool? Because coconut meat is a superfood. Coconut meat is full of fiber, antioxidants, minerals, and vitamins, yet tit still tastes great – could there be an...On the daily, Emma Katharine Ranniger, a Western Washington University senior, strides effortlessly through campus, impeccably dressed. From a 20-minute chat over tea, I found she is not only tailored in...Medical billing is a critical aspect for the medicine business. The smooth functioning of medical billing processes can give a boost to the revenues of the business but at the same time it is not possible for...
