Dive Brief:

• Holiday sales this year will be the best since the Great Recession, according to a new report by B. Riley FBR emailed to Retail Dive. 
• Analysts led by Susan Anderson with the investment bank predict same-store sales at retailers they cover will rise 2.2% this holiday season, versus 1.6% in 2017 and 0.2% in 2016. They also anticipate an increase in gross margin of 45 basis points on average. In their analysis, the best-positioned retailers include Carter's, The Children's Place, American Eagle Outfitters, Guess, Urban Outfitters, Chico's, PVH Corp., G-III Apparel Group, L Brands, Hanesbrands and Hasbro.
• Giving retailers a boost are industry consolidation, lower rents, investment in omnichannel technology and a stronger fashion cycle, the report said. There are concerns, however, over the effect of apparel tariffs, pressures on mall traffic and the continued growth of online shopping. The strongest players this holiday season offer on-trend products, keep lean inventories and have already developed robust omnichannel capabilities, Anderson added. 

Dive Insight:

More retailers could realize the benefits of their investments in omnichannel technology this holiday season, as well as their attention to inventory control and fashion trends, making for the biggest season in a decade, in Anderson's view.

Other studies tend to support the report's conclusions. FTI Consulting said total discretionary holiday spending this year will rise by 5.8% over last year. The National Retail Federation projected total 2018 holiday sales of between $717.5 billion to $720.9 billion, representing a 4.3% to 4.8% increase over last year's sales, which were a 5.3% increase over 2016. The International Council of Shopping Centers forecasted that holiday shopping will rise 4.5% to $807 billion, with $685 billion spent on gifts and other holiday items. 

Anderson and her team expect children's apparel retailers, including Carter's and Children's Place, to do well as Gymboree and Sears close stores. Retailers appealing to teens and young adults, like American Eagle Outfitters, Guess and Urban Outfitters, stand to gain from the continuing fashion cycle. Meanwhile, Chico's B. Riley FBR's top pick among missy/contemporary fashion chains.

Hanesbrands' Champion could benefit from increased traffic at Walmart and Target expected from the liquidation of Toys R Us earlier this year. With the toy seller gone, other retailers have "significant appetite" for toy share, giving a potential boost to Hasbro, Anderson said.

All that said, tariffs remain a worry, mall traffic will likely continue to be a drag on retail performance, Anderson noted. E-commerce has already taken its toll on many chains, and many have responded with their own online initiatives and omnichannel strategies.

“While we believe consumers are conditioned to wait for promotions, which will lead to a continued promotional environment, we also believe that retailers have become smarter at planning these promotions,” Anderson said. “Overall, we believe the environment is markedly better year over year, though the stronger players will likely continue to outperform the weaker ones.”