3 Retail Stocks to Play as Consumers Prioritize Beauty and Wellness

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While the market has fretted about the health of the consumer in recent weeks, many shoppers are still happily spending, especially in categories like wellness and self-care. That’s good news for retailers as diverse as

Kohl’s

to

Warby Parker
.

That’s the takeaway from Cowen & Co.’s recent Future of the Consumer conference, which analyst Oliver Chen said highlighted the recession-resistant nature of particular areas of retail, especially those tied to a general post-Covid reopening.

“With customers returning to work and group events, beauty and wellness adjacent categories are seeing an acceleration,” he writes. “Customers are sticking with their skin care routines developed during the pandemic, while also looking to refresh their color cosmetics for events.”

Barron’s has noted as much following recent earnings from companies like

Nordstrom

(JWN) and

Ulta Beauty

(ULTA), which saw shoppers buy event-driven clothing and accessories as social engagements resume.

In addition, while recent retail earnings have thrown into doubt some shoppers’ ability to handle high inflation, Chen notes that conference participants were more upbeat than some might expect following the selloff in the past few weeks.

A dozen CEOs rated consumer health at 7/10, with 10 being the strongest, although he writes that the bifurcated consumer—with wealthier customers spending more freely, will likely continue to be a theme.

As for specific retailers, Chen says that several saw positive catalysts coming out of the event.

Kohl’s

(KSS) should see its improved loyalty program and value offering drive earnings, while

Lulu’s Fashion Lounge Holdings

(LVLU) has strong demand and doesn’t have debt obligations. He’s also cautiously optimistic about

Warby Parker
’s
(WRBY) full-year profitability outlook, which should be bolstered by new store openings that were delayed during the pandemic.

Write to Teresa Rivas at [email protected]