In the second half of 2024, with the improvement of back-to-school shopping and consumer confidence, expenditure on soft-line products in the United States should show a slight improvement.

The PE ratio of soft-line consumer stocks in the US is lower by 24%, compared to the usual discount level of 13%.$S&P 500 Index (.SPX.US)$The opportunity to absorb this industry at a low point has matured, especially after Federal Reserve Chairman Powell raised the possibility of a rate cut in September. A rate cut will boost consumer confidence and alleviate financial stress for individuals and businesses.

Softline products, also known as soft goods, typically include clothing, bedding, linens, imitation jewelry, luggage, and handbags made from fabrics, textiles, or soft materials. The impact of consumer trends varies for each company, with some benefiting from back-to-school shopping and others directly benefiting from holiday spending.

Data compiled by UBS shows that inflation remains a major concern for US consumers, and more and more shoppers are looking for value in their purchases. Meanwhile, the month-on-month data for August doesn't look as bad. UBS' 'Happiness Index' shows that consumer sentiment improved in August, across all income levels. Consumers' financial situations have also become more secure, with 35.3% feeling financially secure in August, up 50 basis points from July.

UBS believes that due to solid fundamental strategies, favorable quantitative factors, the trend of denim fashion, and strong leverage,$American Eagle (AEO.US)$Will benefit from the back-to-school season.

The 'go-it-alone' strategy is a factor for some successful softline consumer stocks. As more consumers turn to online shopping, companies that can thrive through online sales don't need malls or other third parties to drive consumer participation and sales growth.

UBS Group says, "These companies may seize market share and become industry winners."

Companies in a "premium position" in the market have the best opportunity to "go it alone" and achieve growth, especially those that operate profitable direct-to-consumer businesses, as well as companies that invest in product innovation and branding.

$On Holding (ONON.US)$,$Skechers USA (SKX.US)$And.$Deckers Outdoor (DECK.US)$.

UBS believes that the most likely outperforming softline consumer stocks are those with strong growth prospects, but whose stock prices have not yet fully reflected, including$Levi Strauss & Co. (LEVI.US)$,$Ralph Lauren (RL.US)$,$Amer Sports (AS.US)$,$Birkenstock (BIRK.US)$,$TJX Companies (TJX.US)$,$Boot Barn Holdings (BOOT.US)$,$Signet Jewelers (SIG.US)$, Deckers Outdoor, Under Armour, and Skechers.

On the other hand, UBS Group believes$Nordstrom (JWN.US)$,$Macy's (M.US)$,$Dillard's (DDS.US)$,$Kohl's Corp (KSS.US)$,$Buckle Inc (BKE.US)$The growth of these companies, such as Dillard's, Kohl's Corp, Buckle Inc, is far below the average level and their downward trend has not been fully reflected in the stock prices.

Editor/ping