FX168 Financial News (North America) News Bank of America said Gen Z wants value for money, and their love for discounts may drive shares of some discount retailers up nearly 20%. #2024年下半年市场展望 #

The bank's analysts believe retailers TJ Maxx, Burlington, and Ross have huge upside.

The younger generation is buying more at discount retailers than the older generation, and millennials and Gen Z both increased their share of discounted clothing spending by 4% last year.

This contributed to an increase in total clothing spending, which increased 13% in July this year compared to the same period in 2019. This growth rate exceeds the 5% increase in overall clothing spending.

The Bank of America's report on Wednesday (Sept. 18) attributed the rise in popularity of discount stores to weak inflation.

The bank expects shares of TJX's companies (including stores such as TJ Maxx, Marshalls, and Home Goods) to rise to $135 per share, up 14.6% from Wednesday's intraday high of $117.76.

Analysts expect Burlington and Ross Department Store shares to rise 16% and 18%, respectively, from Wednesday's highs.

Bank of America analysts wrote, “Under years of inflationary pressure, discounted products have attracted customers, thanks to the pursuit of value.”

Since peaking in 2022, inflation has abated significantly, and the consumer price index for August showed prices rising 2.5% year over year — the lowest overall inflation rate in three years.

However, the core inflation rate, which did not include volatile food and energy prices, was higher than expected, causing the stock market to fall briefly.

Analysts said the bank's upward forecast will depend on retailers' ability to retain younger customers eager for discounts, even as their revenue grows, and inflation continues to ease.

They added that retailers can be successful by adding better brands to their shelves, which may put pressure on profits in the short term, but in the long run, it will have a positive impact on customer loyalty, sales, and profits.

“It's important to attract young consumers in the early stages of making money; showing them exciting brands with great value helps maintain loyalty after their revenue rises,” the analyst said.

“The solution was to provide a better and better brand, and more valuable. This can sometimes put pressure on profits in the short term, but in the long run, it should have a huge positive impact on sales and overall profitability,” they added.