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Why Many Premium Consumer Brands Stocks Rose Today

By Anders Bylund - Mar 8, 2021 at 5:35PM

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The next stimulus package looks like a done deal, and that's great news for high-end retailers and brand managers.

What happened

Shares of many consumer brand-manager companies soared on Monday as President Biden's $1.9 trillion stimulus bill was approved in the Senate, moving closer to final signing as soon as Tuesday. For example, footwear specialist Designer Brands (DBI 7.91%) closed the day 10.2% higher, Jimmy Choo and Michael Kors venture Capri Holdings (CPRI 4.33%) rose 9.8%, and cosmetics retailer Sally Beauty Holdings (SBH 4.52%) posted an 11.4% gain. All three stocks notched fresh 52-week highs on Monday.

So what

None of these companies had significant news of their own today. Their moves were based on the idea that the proposed COVID-19 bill now seems unstoppable, as the House already passed an earlier version by an overwhelming majority. The Senate-approved edition includes $1,400 checks to millions of Americans, boosted unemployment benefits, a new child tax benefit, and investments in many projects with direct benefits to working-class professions such as teachers and healthcare workers.

The high-end brands found at stores like Sally Beauty, Michael Kors, and Designer Shoe Warehouse should benefit from these capital injections into America's most cash-strapped demographic groups.

A young woman in a summer dress smiles at the camera, holding several shopping bags over her shoulder.

Image source: Getty Images.

Now what

This is not the first time these stocks have surged upward thanks to progress on the long-awaited stimulus bill. It may very well be the last big jump, though. Once the bill gets the final John Hancock from Joe Biden, the high-end retailers and brand managers will have to prove that they can take advantage of higher spending power in America's low to middle classes.

The next couple of quarters will be crucial to that effort as each company laps the darkest days of last year's coronavirus lockdowns. With easy year-over-year comparisons and the proliferation of vaccine injections, all on top of the stimulus boost, they should be able to deliver impressive results in the spring and early summer.

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Stocks Mentioned

Capri Holdings Limited Stock Quote
Capri Holdings Limited
CPRI
$46.02 (4.33%) $1.91
Designer Brands Inc. Stock Quote
Designer Brands Inc.
DBI
$14.60 (7.91%) $1.07
Sally Beauty Holdings, Inc. Stock Quote
Sally Beauty Holdings, Inc.
SBH
$12.73 (4.52%) $0.55

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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