We'll discuss 2 specialty retail stocks that stand out at this point.
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This story originally appeared on MarketBeat
Let's face it – retail is one of the most competitive industries out there. Consumer preferences are constantly changing and it takes a lot for these types of businesses to make hard earned cash from buyers. This is one of the reasons why investing in specialty retail stocks can be a great long-term strategy if you choose wisely. Because specialist retailers focus on certain product categories such as office supplies, furniture or men's or women's clothing, they can often develop a unique niche and differentiate themselves from their competitors.
Thanks to all of the economic upturn over the past year and the fact that a newly vaccinated population is back shopping in person, we could see some strong sales from specialist retailers in the coming months. There are 2 specialty retail stocks currently emerging as potential buyers based on their unique brands and impressive earnings reports. Let's take another look at these fascinating stocks below.
RH (NYSE: RH)
RH, formerly known as Restoration Hardware, is a great specialty retailer because it does something completely unique. Although there are many home furnishings stores, RH stands out for specializing in ultra-high-end luxury homeware, creating a unique shopping experience in every single store. Homeowners will find upscale products such as furniture, lighting, bath products, outdoor & garden, tableware textiles and decorations at RH, and each of the company's showrooms offers an original and aesthetically pleasing experience.
The company has Warren Buffett's Berkshire Hathaway among its investors and is undoubtedly benefiting from a hot residential real estate market. With that in mind, regardless of economic developments, RH has upside potential as the company does not have seasonal inventory exposure and is geared towards affluent consumers who are big bucks all year round. The stock has retreated from a rally from $ 70 to $ 700 per share in the past few months, but it could look forward to further gains according to the company's latest earnings report.
RH revenue grew 78% year over year to $ 860.8 million in the first quarter and adjusted diluted earnings per share increased 285% year over year to $ 4.89 each Share. Other positive results from the standout report included an increased outlook for fiscal 2021 and the fact that the company expects to be net debt-free by the end of the fiscal year. The bottom line is that RH is a specialist retail company that operates at a very high level, which is reflected in both the profit figures and the share prices.
Love Bag (NASDAQ: LOVE)
There's a lot to love about this specialist retailer that designs and makes modular sofas and bean bags. The special thing about Lovesac is how it created a brand and product lines that quickly became the favorite furniture of an entire generation. Millennials are one of Lovesac's most frequent customers as they love the idea of the company's flagship product, a unique modular piece of furniture known as "sactional". These are loungers that can be easily assembled and disassembled to meet the needs of the consumer. There are literally dozen of different ways Sactionals can be rearranged to fit into someone's home, and the fact that customers can add more pieces and accessories over time is perfect for creating repeat buyers.
Although the company has 91 showrooms across the United States, investors should be impressed with the progress it has made in developing its digital sales channels over the past year. Ecommerce sales rose over 250% in 2020 and while the company may not be able to keep up with this breakneck pace, Lovesac has proven it is more than capable of finding buyers online. Also, keep in mind that pedestrian traffic will increase in these showrooms as the pandemic subsides.
Lovesac just reported very strong earnings results for the first quarter of 2022, including net revenue growth of 52.5% and diluted earnings per share of $ 0.13, up 122.1% year over year. Analysts love the stock too, as Lovesac received a target price increase from Craig Hallum on Thursday. The tailwinds of the pandemic continue to add to the growth of this specialist retailer, and this narrative should last for the foreseeable future. These are all good reasons why Lovesac is a great stock to add to your shopping list.
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