Although it’s a restaurant chain, the emphasis on value gives it some elements of a consumer staples company. Innovations such as digital menus that automatically change throughout the day, automated kiosks for ordering, online and mobile order capabilities, and delivery options are making McDonald's more accessible than ever.Īt the same time, the restaurant chain still has an emphasis on value that keeps customers coming back for more, plus its drive-thrus helped it weather the pandemic better than many others. McDonald's has come a long way from its heyday in the mid-20th century, and the fast-food colossus has worked hard to keep up with the times. As of April 2022, the company had more than 34,948 locations across the globe and expects to have 55,000 locations by 2030, indicating no shortage of growth opportunities. In September 2022, the company announced a “reinvention plan” to drive annual comparable sales growth rate of 7%-9% and net sales growth of 10%-12% over the next three years by investing in employee engagement, store efficiency, digital programs, Starbucks Rewards membership, product innovation and new stores. However, it’s facing similar challenges to Nike in China as its zero-Covid policy has cooled off sales there. Although those sales numbers fell sharply during the pandemic, Starbucks is rebounding in the U.S. You can see the company’s success in its comparable-store sales, which have a history of steadily growing. By introducing the European café concept to the U.S., Starbucks tapped into consumers’ urge to treat themselves to affordable luxuries, and its premium beverages now have a loyal following the world over. The coffee company plays a major role in how a large part of the world's population starts its day. Even though revenue growth has been sluggish during the pandemic, the company has delivered solid profits and has outperformed rivals such as Adidas and Under Armour ( NYSE:UAA)( NYSE:UA). Nike has built a strong digital ecosystem around apps such as SNKRS and the Nike Training Club, which has buffered much of the impact. With the global sportswear company working to play a bigger role in fast-growing areas such as China, the sky's the limit for Nike's future growth.Īlthough COVID-19 has affected Nike’s business, and tight restrictions in China have weighed on performance in the region, the pandemic has also accelerated the company’s shift to digital and direct channels, which is a key part of its strategy. Nike’s market share of athletic footwear, recently estimated at 39%, puts it well ahead of international competitors Adidas ( OTC:ADDYY) and ASICS ( OTC:ASCCF). Long after Michael Jordan left the professional basketball court, Air Jordan shoes remain a mainstay of Nike's business. The company has a long history of outperforming the S&P 500. The strength of Nike's business model stems from its product innovation, marketing strength, use of celebrity endorsements, and tying the success of high-profile athletes to the company's products. Nike has established a dominant position in athletic footwear and apparel, with more than half a century of innovation in making sportswear appealing to a broad consumer audience. Several consumer discretionary companies stand out as being among the best in their industries: These companies should also be better able to weather a recession and endure the ongoing bear market since they have deeper pockets and brand equity to fall back on. More recently, rising interest rates have the potential to cool economic growth, presenting a challenge for consumer discretionary companies in today’s stock market.įocusing on well-known brands and industry leaders in this sector is generally a formula for success since the best stocks have long been winners for investors. But, as the economy reopens, investors have a unique opportunity in the sector. The COVID-19 pandemic created unprecedented challenges for many consumer discretionary companies. ![]() Direct-to-consumer retailers that sell goods by catalog, mail, or via e-commerceĬonsumer discretionary stock prices tend to rise and fall with the overall economy, making them cyclical stocks.Retailers of various kinds, including department stores, home improvement retailers, electronics retailers, home furnishers, and clothing stores.Makers of furniture, appliances, housewares, and other home furnishings.Understanding consumer discretionary stocksĬonsumer discretionary businesses cover several different industries, but all rely on consumers spending money that they don't need to spend.Ĭonsumer discretionary companies include the following types of businesses:
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