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<< Return to Part VI

As we enter into this Christmas season, that can only mean one thing: Shopping. This article is meant to give a personal perspective of how the retail sector is shaping up for this year and into the future. For this experiment and research I have used the closest mall in proximity to me, the Woodland Mall.

This mall, owned by Pennsylvania Real Estate Trust, has been open since 1968. Over 100 stores, restaurants, and kiosks operate in 1.1 million square feet. Many of the stores are privately owned or are small, local players and have been left out of this article. Let’s take a look at some of the stores entering their busiest time of the season.

All yields, share prices, and analysts’ estimates are taken from Yahoo Finance upon market close Friday, November 25. Current and next year's earnings are analysts estimates for the current fiscal year and the following one. Earnings are listed on a per-share basis.

The retailers that did not fit into anchor stores, clothing, jewelry, shoes, or restaurants are listed below:

Store: Apple (NASDAQ:AAPL)

Apple is a worldwide leader in electronics with its best in class offerings of iPods, iPads, and iPhones. The company created retail stores several years ago, and have done a good job of maximizing sales per square foot. The store is always one of the busiest in the mall and is the only location on the Western side of Michigan.

  • Competitors: Computers-Hewlett Packard (NYSE:HPQ), Dell (Dell); Tablets-none; MP3 Players-none
  • Share Price: $363.57
  • Current Earnings: $34.56
  • Next Year Earnings: $38.59
  • Dividend Yield: 0
  • Number of Stores: 357 Total, 245 in USA (as of 09/24/11)
  • Recommendation: Buy

Apple shares traded over $400 last month for the first time ever, and hit an all-time-high adjusted share price. Apple has billions of dollars in cash. With the passing of Steve Jobs, it becomes more apparent that a dividend will be issued. The company continues to have the highest sales per square foot in its retail stores. Apple products, like iPhones, iPads, and iPods, are sold in other outlets as well. Shares should trade above $400 again soon. Look for a strong holiday season to propel shares further.

Store: AT&T (NYSE:T)

AT&T is one of the three leading phone companies in America. The company also offers bundle packages with cable, internet, and home phone services.

  • Competitors: Verizon (NYSE:VZ), Sprint (NYSE:S)
  • Share Price: $27.41
  • Current Earnings: $2.32
  • Next year Earnings: $2.49
  • Dividend Yield: 6.2%
  • Number of Stores: ?
  • Recommendation: Buy

As AT&T attempts its takeover of T Mobile, investors should consider picking up shares of the telecommunications giant. Now yielding over six percent, shares of AT&T are a great value. Consider buying shares now to take advantage of the generous dividend payout.

Store: Bath and Body Works, owned by Limited Brands (LTD)

Bath and Body Works sells soap, candles, and other scented products to accent homes and apartments. The company is owned by Limited Brands, which also owns Victoria’s Secret stores.

  • Share Price: $ 38.33
  • Current Earnings: $2.52
  • Next Year Earnings: $2.87
  • Dividend Yield: 2%
  • Number of Stores: 2628 Total Limited Brands Stores (as of 11/16/11)
  • Recommendation: Buy

Limited Brands has a nice retail portfolio with Bath and Body Works and Victoria’s Secret. The shares appear to be undervalued as the company expands internationally and gains back some market share.

Store: Gamestop (NYSE:GME)

Gamestop is the leading retailer of video games and video game accessories in the nation. Stores are found in malls and strip mall. The bestselling video games can be preordered and picked up at midnight at participating Gamestop stores.

  • Competitors: Best Buy (NYSE:BBY), Amazon (NASDAQ:AMZN)
  • Share Price: $21.51
  • Current Earnings: $2.88
  • Next Year Earnings: $3.15
  • Dividend Yield: 0
  • Number of Stores: 6627 (as of 11/22/11)
  • Recommendation: Buy

Gamestop needs a good holiday season and quarter to gain investor trust. The shares have recovered a little bit from their two year low of under $18. Shares are in the downturn right now and appear as if they will head back up shortly. The company still faces the same threats of competition. Several companies have added new used game trade-in models, including Best Buy and Toys R Us. Gamestop still faces competition on new games from Amazon and the video game companies themselves. The acquisition of congregate.com and several new blockbuster video game releases could help the company and stock significantly.

Store: GNC Holdings (NYSE:GNC)

GNC is a leader in nutrition and weight loss products.

Competitors: Walgreens (WAG), CVS Pharmacy (NYSE:CVS)

  • Share Price: $27.35
  • Current Earnings: $1.46
  • Next Year Earnings: $1.72
  • Dividend Yield: 0
  • Number of Stores: 7300 (as of 03/31/11)
  • Recommendation: Buy

Shares of GNC went public in April of 2011 and are currently at an all-time high. Stores are positioned well in malls and also located in Rite Aid (NYSE:RAD) locations.

Store: Lenscrafters, Sunglass Hut, owned by Luxottica (NYSE:LUX)

Luxottica has two of the world’s largest eyecare brands in Lenscrafters and Sunglass Hut.

  • Competitors: Eye Care Centers of America (Private)
  • Share Price: $26.49
  • Current Earnings: $1.39
  • Next Year Earnings: $1.64
  • Dividend Yield: 1.6%
  • Number of Stores: 6,350 Total Stores (as of 05/11/11)
  • Recommendation: Buy

Luxottica owns the Lenscrafters, Sunglass Hut, and Pearle Vision retail outlet brands. Several sunglass brands including Oakley are owned by the company as well. Shares trade close to a fifty two week low and represent a great buying opportunity at this level.

Store: Lids, owned by Genesco (NYSE:GCO)

Hat World and Lids, two of the leaders in hat stores, are both owned by Genesco. The company appears to have a large market share in the hat market.

  • Competitors: Finish Line (NASDAQ:FINL), Foot Locker (NYSE:FL)
  • Share Price: $54.32
  • Current Earnings: $3.71
  • Next Year Earnings: $4.29
  • Dividend Yield: 0
  • Number of Stores: 985 Lids, Hat World, and other Hat Stores (as of 01/29/11)
  • Recommendation: Buy

Genesco is a large retailer broken into several segments of hats, shoes, luggage, and other clothing accessories. The company just raised earnings estimates for the full year. Finish Line made an acquisition attempt for the company years ago and it could become a target again of a retailer or private equity.

Store: RadioShack (NYSE:RSH)

Radio Shack sells consumer electronics in its stores. Computers, hardware, phones, television equipment, and batteries, are among the products sold in stores.

  • Competitors: Best Buy (BBY)
  • Share Price: $10.66
  • Current Earnings: $1.18
  • Next Year Earnings: $1.40
  • Dividend Yield: 4.5%
  • Number of Stores: 4467 (as of 03/31/11)
  • Recommendation: Hold

The dividend yield rose this year when the company doubled its annual one time dividend from $0.25 to $0.50. The company has almost enough cash to cover its current debt level. The dividend yield is tempting but shoppers may be going elsewhere including online to purchase electronics this year.

Store: Williams and Sonoma (NYSE:WSM)

Williams and Sonoma is a leading retailer of home furnishings focusing on the kitchen and bathroom. The company also owns the Pottery Barn brand and has over 500 total stores across the nation.

  • Share Price: $35.01
  • Current Earnings: $2.26
  • Next Year Earnings: $2.54
  • Dividend Yield: 1.9%
  • Number of Stores: 260 Williams and Sonoma, 592 Total (as of 01/30/11)
  • Recommendation: Hold

Shares appear to be fully valued trading at 16 times earnings. The price to sales ratio of 1.0 could look promising if the company continues to grow sales.

Summary

  • Apple, $363.57, Buy
  • AT&T, $27.41, Buy
  • Bath and Body Works, $38.33, Buy
  • Gamestop, $21.51, Buy
  • GNC Holdings, $27.35, Buy
  • Lenscrafters, Sunglass Hut, $26.49, Buy
  • Lids, $54.32, Buy
  • Radioshack, $10.66, Hold
  • Williams and Sonoma, $35.01, Hold
Source: Hitting The Mall For The Holiday Season, Part VII: Other Retailers