2025 could be a transformative year for the retail industry. After a period of rising consumer confidence and increased discretionary spending amid lower post-coronavirus inflation, retailers have an opportunity to build loyalty among existing customers and expand their bases at the same time. However, there are potential hurdles as well – retail spaces are becoming increasingly crowded, supply chain issues may become unbearable depending on geopolitical developments, and many companies are scrambling to determine how best to integrate AI into everything from product development to marketing.
One of the keys to success in the new year is maintaining momentum after the holiday peak — always a busy period for retail stores — in a period when spending often trends downward. Investors keen to buy shares of retail companies that are expected to continue after the end-of-year spending boom may look to comments from Wall Street analysts. Build-A-Bear Workshop Inc. New York Stock Exchange: BBW Haverty Furniture Company. New York Stock Exchange: HVT They are two retail traders that stand out among analysts. A third company, Natural Grocers from Vitamin Cottage Inc. New York Stock Exchange: NGVCIt is also worth noting the momentum of stock prices at the end of the year.
Build-A-Bear: Up and down growth, but the web is lagging
Build-A-Bear workshop today
Bear building workshop
(As of 12/20/2024 at 05:31 PM ET)
- 52 week range
- $21.24
▼
$47.01
- Dividend yield
- 1.83%
- P/E ratio
- 11.64
- Price target
- $52.50
Makers of a popular line of plush stuffed products and related accessories, Build-A-Bear has an angle in both direct-to-consumer and franchise (or business-to-consumer) strategies. The company has strong brand recognition, supported by its personal experience and expanding its workshop reach to clients. In recent quarters, it has also worked to build on its digital footprint, with some success.
Build-A-Bear reported a fairly strong third quarter, with revenue of $119 million and statutory earnings per share of 73 cents, both beating analysts’ expectations. Leveraging the workshop experience has been a key factor in this growth. During the quarter, the company opened 17 new locations in a wide range of environments, including several international locations, with the goal of serving a greater proportion of the accessible market. This is part of the company’s plans to increase its total number of locations by about 25% in the three years to the start of 2025. New product launches, such as the company’s Mini Beans range, have also helped stimulate new and repeat customer growth. .
However, Build-A-Bear faces some uphill battles in the new year. The company’s online sales continue to underperform expectations, prompting Build-A-Bear to narrow its full-year revenue guidance. Developing this part of the business will be essential to maintain the current growth trajectory.
Build-A-Bear has a Buy rating with approximately 22% upside potential based on a consensus price target of $52.50 as of December 19, 2024.
Haverty: Recent struggles, but there is room for growth in 2025
Haverty furniture companies today
haverty furniture companies
(As of 12/20/2024 at 05:16 PM ET)
- 52 week range
- $21.14
▼
$37.05
- Dividend yield
- 5.91%
- P/E ratio
- 13.63
- Price target
- $45.00
While shares of Build-A-Bear rose throughout most of 2024, shares of furniture and mattress maker Haverty Furniture fell. As of December 19, the company had a one-year total return of -37%. These declines are likely attributable to the company’s poor performance in recent earnings reports, in which it reported lower revenues, profits, comparable store sales and gross margin, among other things.
However, 2025 could bring about a trend reversal for this 139-year-old company. Most notably, Haverty announced in November Stephen Burdett, the company’s former president, will also become CEO from January. Burdette was part of the leadership team that successfully led the company through the COVID-19 pandemic, helping it achieve net income growth of approximately 158% since 2019.
The company also has the opportunity to capitalize on key parts of its thriving business. For example, its design business reported an increase in average ticket size last quarter and 19% year-over-year growth. The company has a strong cash position, with more than $121 million on hand as of the end of the third quarter and no funded debt. This will allow it to pursue an aggressive expansion plan that includes three additional new stores in the fourth quarter. It also helps smooth the company’s 5.78% dividend.
Natural Grocers: Hot inventory may cool, but profits persist
Natural Grocers from Vitamin Cottage today
Vitamin Cottage Natural Grocers
(As of 12/20/2024 at 05:16 PM ET)
- 52 week range
- $14.31
▼
$47.56
- Dividend yield
- 1.22%
- P/E ratio
- 26.49
Health food chain Natural Grocers has doubled in number Share value Since the November election, which may be related to News of the nomination of Robert F. Kennedy Jr. to serve as Secretary of Health and Human Services in the new administration. However, the company’s growth was also likely due to strong fourth-quarter earnings, including 37% net sales growth and a 53% year-over-year net income gain, as well as strong growth in comparable store sales.
Natural Grocers may have already maximized its growth potential right now — shares generally fell from late November through December 19 — but it remains a solid dividend stock. In the past five years, the company has paid nearly $5 per share in cumulative dividends, with a three-year annual earnings growth rate of about 13%.
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