December 1, 2021
For many brands, 2021 was a recovery year. The dramatic shifts in consumer behavior in 2020 continued, but with lockdowns behind us – hopefully for the foreseeable future – and in-person gatherings and commerce resuming, it marked a return to normalcy (somewhat).
Some of the publicly traded consumer brands impacted by last year’s business conditions repositioned themselves, built up digital platforms and identified new product and business lines. These are the winners of 2021. Let’s take a look at a few of them.
Many large retailers have flourished throughout the pandemic, and its momentum doesn’t seem to be losing steam anytime soon. Target Corporation (Tii:TGT) invested heavily to build up its same-day fulfillment capabilities and is opening more small-format stores. These investments are paying dividends. Digital comparable sales increased 29% for the company’s third quarter. Further, the retailer’s efforts may well increase its customer base, and a reputation as a “step above” its competitors is sure to attract brands that will excite its consumers and increase purchases. Target’s shares are up more than 26% for the year.
Last year was a mixed bag for The Walt Disney Company (Tii:DIS). While the pandemic pummeled its theme parks and cruise operations, the entertainment giant made significant inroads in the streaming content business with the successful launch of its Disney+ platform. With restrictions lifting, Disney’s other operations are picking up steam. It also doesn’t hurt that four of the top 10 highest-grossing films of 2021 are Disney productions: Shang-Chi and the Legend of the Ten Rings, Black Widow, Eternals and Jungle Cruise. As a result of this bounce back in operations, diluted EPS from continuing operations for the year ended October 2, 2021, totaled $1.11, offsetting a loss of $1.57 in the prior year.
GoPro, Inc. (Tii:GPRO) has always enjoyed a loyal userbase. But the camera manufacturer and tech company revitalized its business model, adding more focus to its subscription services. As a result, subscriptions generated $14 million in the third quarter alone – a 143% year-over-year gain. Strong revenues, earnings, margin, and cash flow growth during the quarter led the company to raise its margin and profitability outlook for the year. Founder, CEO and Chairman Nicholas Woodman cited strong demand, an effectively managed supply chain and channel inventories combined with a successful new product launch for GoPro’s highest gross margins since 2015 and its fifth consecutive profitable quarter on a non-GAAP basis. While off its highs, GoPro shares are up some 20% for the year.
Focusing on expanding the brand with a whopping 2,000 new locations planned in 2022 makes Starbucks Corporation (Tii:SBUX) a winning brand for 2021. Many of these are in international locations, which tend to garner larger profits for the java giant. This aggressive expansion comes on the heels of a record fourth quarter in which consolidated net revenues rose 31% to $8.1 billion. Making the Seattle-born coffeehouse even more of a winner, it announced that by January 2022, employees with two or more years of service would see up to a 5-10% increase in their pay. In Summer 2022, all hourly retail workers in the U.S. will make an average of nearly $17 per hour, with hourly barista rates ranging from $15 to $23 per hour across the country.
The final winner on our list is has endured its fair share of tumult over the last two years. The retailer formerly known as L Brands, Inc., Limited Brands, Inc. and The Limited, Inc. terminated the planned sale of its Victoria’s Secret division to a private equity firm, opting to split into Bath & Body Works Inc. (Tii:BBWI) and Victoria’s Secret & Co. (Tii:VSCO). Though analysts were skeptical over the move, Bath & Body Works has performed admirably from a business standpoint since the split-up. Citing ongoing strong customer response to its merchandise assortment, a growing, loyal customer base, and its associates’ efforts, sales for the retailer’s third quarter of 2021 increased 53% compared to pre-pandemic 2019. Bath & Body Works, which pays a quarterly dividend of $0.15 per share, has also seen its stock price nearly double in the calendar year.
There’s little doubt that 2022 will bring its share of surprises, so it’s anyone’s guess which brands will end up being next year’s superstars. Based on the competition, numbers, and past performance, the ones we’ve mentioned could well remain winners.
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