The retail industry is looking forward to benefiting substantially from rising consumer spending and surging e-commerce sales this holiday season despite some threats like inflation or the virus. Therefore, prominent apparel retailers Lululemon Athletica (NASDAQ:LULU) and Abercrombie & Fitch (ANF) should benefit. But which of these stocks is a better buy now? Read more to find out.Lululemon Athletica Inc. (LULU) and Abercrombie & Fitch Co. (ANF) are two popular companies in the apparel retail industry. LULU designs, manufactures, and distributes men’s and women’s athletic apparel and accessories. The company sells its products through its Lululemon and Ivivva-branded stores, outlets and warehouse sales, yoga studios, health clubs, fitness centers, mobile apps, and lululemon.com e-commerce website. On the other hand, ANF offers an assortment of apparel, personal care products, intimates, and accessories for men, women, and children. The company sells its Abercrombie and Hollister brand products through its stores, direct-to-consumer channels, third-party wholesalers, franchises and licensing arrangements, and e-commerce platforms.
The strong digital presence established by most apparel retailers has enabled them to rebound from their pandemic-lows, introduce new fashion in sync with the changing consumer trends, and expand their reach. Moreover, rising foot traffic, declining jobless claims, and increasing consumer spending led to strong retail sales. The National Retail Federation (NRF) forecasts holiday retail sales to rise between 8.5% -10.5% during November and December.
Although the recent breakout of the omicron coronavirus variant is expected to slow down foot traffic to the brick-and-mortar stores, e-commerce sales are to help the industry generate solid earnings this holiday season. Investors’ interest in retail stocks is evident from the SPDR S&P Retail ETF’s (XRT) 2.5% returns over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 1.2% gains. So, both LULU and ANF should benefit.