2025 could be a transformative year for retail. Following a period of rising consumer confidence and increased discretionary spending amid easing post-COVID inflation, retailers have an opportunity to build loyalty among existing customers while expanding their base. However, there are also potential obstacles: retail spaces are becoming increasingly crowded, supply chain issues can become untenable depending on geopolitical events, and many companies are struggling to determine how best to incorporate AI into everything from product development to marketing.
One of the keys to success in the new year is maintaining momentum beyond the holiday rush (always a busy time for retailers) during a time when spending often tends to decline. Investors looking to buy shares of retailers poised to ride out a year-end spending boom may want to pay attention to comments from Wall Street analysts. Workshop Build-A-Bear Inc. New York Stock Exchange: BBW and Haverty Furniture Companies Inc. New York Stock Exchange: HVT are two retailers that stand out among analysts. The third company is Natural Grocers by Vitamin Cottage Inc. New York Stock Exchange: NGVCIt is also worth noting the dynamics of stock prices by the end of the year.
Build-A-Bear: Revenue and profit growth, but internet lags
Build-A-Bear Workshop Today
Bear assembly workshop
(As of 12/24/2024 4:45 PM ET)
- 52 week range
- $21.24
▼
$47.01
- Dividend yield
- 1.74%
- P/E ratio
- 12.21
- Target price
- $52.50
Build-A-Bear, which produces a popular line of stuffed plush products and related accessories, pursues both a direct-to-consumer and a franchising (or business-to-consumer) strategy. The company enjoys strong brand recognition, supported by personal presence and enhanced masterclass experiences for clients. The company has also worked to expand its digital presence in recent quarters, with some success.
Build-A-Bear reported fairly strong third-quarter results, with revenue of $119 million and statutory earnings per share of 73 cents, beating analysts’ forecasts. The key to this growth was leveraging the workshop experience. During the quarter, the company opened 17 new offices in a variety of locations, including many countries around the world, as it strives to serve a larger percentage of its target market. This is part of the company’s plans to increase its total number of stores by about 25% in the three years to early 2025. The launch of new products such as the company’s Mini Beans collection has also helped drive the growth of repeat and new customers. .
However, Build-A-Bear faces an uphill battle in the new year. The company’s online sales continue to lag expectations, prompting Build-A-Bear to narrow its revenue forecast for the full year. Growing this part of the business will be essential to maintaining the current growth trajectory.
Build-A-Bear has a Buy rating with nearly 22% upside potential based on a consensus price target of $52.50 as of December 19, 2024.
Haverty: Recent challenges, but opportunities for growth in 2025
Haverty Furniture Companies Today
Haverty Furniture Company
(As of 12/24/2024 4:45 PM ET)
- 52 week range
- $21.14
▼
$37.05
- Dividend yield
- 5.82%
- P/E ratio
- 13.84
- Target price
- $45.00
While Build-A-Bear shares have risen for most of 2024, shares of furniture and mattress maker Haverty Furniture have fallen. As of December 19, the company’s total annual return was -37%. The decline is likely due to the company’s poor performance in its recent earnings reports, in which it reported declines in revenue, profit, comparable store sales and gross profit, among other things.
However, 2025 could bring a trend reversal for the 139-year-old company. Most notably, Haverty announced in November that Stephen Burdette, who previously served as the company’s president, would also become CEO starting in January. Burdett was part of the leadership team that successfully steered the company through the COVID-19 pandemic, helping it achieve net income growth of nearly 158% since 2019.
The company is also positioned to capitalize on key parts of its business that are thriving. For example, its design business reported an increase in average ticket size in the most recent quarter, up 19% year-over-year. The firm has a strong cash position, with more than $121 million on hand at the end of the third quarter and no funded debt. This will allow the company to pursue an aggressive expansion plan that includes three more new stores in the fourth quarter. This also helps boost the company’s dividend yield of 5.78%.
Natural Food Retailers: Hot Stocks May Be Cooling, But Dividends Are Maintained
Natural grocery stores from the company vitamin cottage today
Natural Grocery Stores from Vitamin Cottage
(As of 12/24/2024 4:45 PM ET)
- 52 week range
- $14.31
▼
$47.56
- Dividend yield
- 1.20%
- P/E ratio
- 26.96
Healthy food chain Natural Grocers has more than doubled in share price after the November elections, which may be due to news that Robert F. Kennedy Jr. has been named Secretary of Health and Human Services in the new administration. However, the company’s growth is also likely driven by strong fourth-quarter earnings, including 37% net sales growth and 53% year-over-year net income growth, as well as strong comparable store sales growth.
Natural Grocers may have already maxed out its upside potential for now—shares typically fell from late November through Dec. 19—but it’s still a strong dividend play. Over the past five years, the company has paid a cumulative dividend of nearly $5 per share, with a three-year annual dividend growth rate of nearly 13%.
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