(Bloomberg) -- Pandemic-driven lockdowns, shuttered malls and stuck-at-home consumers have hurt retailers in 2020 as Covid-19 ravaged the economy. With Black Friday around the corner, equity traders are bracing for a holiday season where brick-and-mortar businesses that lack strong digital platforms could suffer.
For the first time ever, more consumers intend to shop online than in stores, a Deloitte survey shows. U.S. online holiday sales will total $189 billion, shattering all previous records with a 33% boost from last year, according to Adobe (NASDAQ:ADBE) Analytics. That’s equal to two years’ growth in one season.
“This year is unlike anything else,” said Ken Perkins, president and founder of Retail Metrics. “People are going to be really adverse to come into stores on Black Friday, so traffic will be relatively more modest. Curbside pick will be extremely important this holiday season. Impulse buying will also fall off as online shopping tends to be very targeted.”
Mall-based retailers have been among the most battered stocks of 2020 amid rapid changes in consumer behavior as lockdowns resulted in less need for some items and accelerated the shift toward e-commerce and away from physical stores.
But with promising vaccine trial results coming through, signaling consumers might be ready to go back to the mall, retail stocks have been soaring. The S&P 1500 Apparel Retail Index erased its pandemic-spurred losses earlier this month, while the S&P 1500 Retailing Index hit a record high in October.
Here’s a look at some potential stock winners and losers in an unprecedented holiday shopping season. Year-to-date stock performance follows each name.
Electronics
With the release of new Xbox and PlayStation devices, gaming consoles are coveted and will be “almost impossible to get your hands on,” Perkins said. In addition, home-related electronics will be extremely popular.
Electronics like personal computers, televisions, tablets and virtual-reality accessories have also been in high demand, according to a recent data analysis from NPD Group/Retail Tracking Service.
Key stocks: Best Buy Co (NYSE:BBY). (+29%), Rent-a Center Inc. (+26%), Aaron’s Holdings Co. (+16%), Conn’s Inc. (-6.3%) and Acco Brands Corp. (-11%).
Toys
Pandemic spending earlier this year, won’t hold parents back from holiday shopping. They are likely to spend “the same or more” on toys this season, according to DA Davidson analyst Linda Bolton Weiser, who cited research done by Mattel Inc (NASDAQ:MAT).‘s executives.
“The pandemic did not represent a pull-forward of holiday demand,” Weiser said. Furthermore, Mattel’s core brands probably added shelf space as retailers are “filling their aisles with traditional evergreen brands like Barbie and Hot Wheels” because there are fewer toys this year that are based on entertainment properties.
Key stocks: Mattel (+14%), Hasbro Inc (NASDAQ:HAS). (-13%), Amazon.com Inc (NASDAQ:AMZN). (+69%), Walmart (NYSE:WMT) Inc. (+27%) and Target Corp. (NYSE:TGT) (+39%).
Home Goods
The boom in suburban living has resulted in strong sales at home furnishing companies. “Even with the vaccine coming, people are moving out of the city, into the burbs, and they need to fill their homes,” Perkins at Retail Metrics said.
Williams-Sonoma (NYSE:WSM) Inc. said on a recent call that demand for its products had continued into November, while TJX (NYSE:TJX) Cos. executives said on its third-quarter call that HomeGoods will be “one of the healthiest divisions” moving into the new year.
Key stocks: Williams-Sonoma (+54%) and TJX (+5.4%).
E-commerce & Fintech
Online transactions are likely to continue to surge as Covid-19 cases rise globally, and with the U.S. Centers for Disease Control and Prevention calling shopping in crowded stores during the holiday period a “higher risk” activity.
Read more: Virus Spreads Out Black Friday Shopping, Puts Digital at Fore
Internet retail names that target a more affluent consumer also stand to gain, KeyBanc said in its holiday outlook report. In addition, companies that have added customers during the pandemic could convert them into holiday shoppers, while others are well positioned to steal market share from struggling retailers if lockdowns continue.
Key stocks: Square Inc (NYSE:SQ). (+224%) and PayPal Holdings Inc (NASDAQ:PYPL). (+90%), Farfetch (NYSE:FTCH) Ltd. (+407%), Nordstrom Inc (NYSE:JWN). (-40%), Peloton Interactive (NASDAQ:PTON) Inc. (+271%), Etsy (NASDAQ:ETSY) Inc. (+211%), Amazon, Walmart and Target.
Lockdown Hurdles
Department store retailers will face hurdles this holiday season, according to several Wall Street analysts. All department stores saw “steep” drops in online traffic ahead of Thanksgiving, said CFRA Research analyst Camilla Yanushevsky, while Bloomberg Intelligence analyst Poonam Goyal said early Black Friday sales and holiday shopping would give department stores “a much-needed boost.”
Cleveland Research was turning cautious on the holiday outlook for department stores, while JPMorgan Chase & Co. (NYSE:JPM) analyst Matthew Boss recently cut fourth-quarter same-store sales estimates to below-consensus levels. Meanwhile, Marshal Cohen, NPD’s chief industry adviser for retail expects fashion and beauty categories to be “faced with the challenge of making up lost ground in hopes of a healthy finish to 2020.”
Key stocks: Macy’s Inc. (-36%) and Nordstrom.
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