Shoppers, Get Ready! Small Cap Retailers to Watch

November 27th, 2013
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With Black Friday right around the corner, retailers are gearing up, "leaking" ads or outright publishing them. Much ado has been made over Wal-Mart's controversial Thanksgiving evening hours, though 38% of shoppers still plan to shop on Thanksgiving evening. According to a recent LA Times article, 55% of people plan to shop at a Black Friday kickoff event, though many of them will do so online. Retailers are very much in focus given the impending shopper-friendly "holiday," as well as the potentially even larger Cyber Monday (which is forecasted to bring in $2.2 billion for retailers). The holiday season overall is expected to reach a total of $602.1 billion in retail spending, according to the National Retail Foundation.

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Of course, major retailers aren't the only player in the game. Small cap companies who sell consumer goods also have a lot to gain during the holiday shopping period. Around half of all holiday shoppers will spend between $300 and $800 - and 14% plan to spend more than that amount. For small cap retailers, capturing some of that spending is important. This short list of small cap retailers explores a few popular apparel and accessory companies that may be among the more coveted brands this holiday season:

Children's Place Retail Stores, Inc (Nasdaq:PLCE), based in Secaucus, NJ, operates the popular children's clothing store The Children's Place. The company operates more than 1,100 stores and employs more than 4,000 people full-time in the US and Canada. Last year, the company expanded into Arab Gulf states and Saudi Arabia. This year, the company announced plans to open franchise locations in Israel via franchisee Fox-Wizel Ltd. PLCE closed November 18 at $55.25, up $0.22, with a market cap of $1.23 billion. Their 52-week trading range is $42.21 - $58.89.

Another specialty retailer, Canton, MA-based Destination XL Group, Inc (Nasdaq:DXLG), offers big and tall men's apparel in nearly 400 stores in the US and the UK. While the company was previously called Casual Male Retail Group, Inc, it changed its name in February of this year following the success of its Destination XL stores, which first opened in 2010. The company plans to have more than 200 Destination XL stores by the end of 2015, and will be closing its Casual Male stores. DXLG closed November 18 at $6.60, up down $0.04, with a market cap of $336.16 million. Their 52-week trading range is $3.42 - $7.28.

Trendy clothing retailer American Apparel Inc. (NYSEMKT:APP), based in Los Angeles sells basic fashion items and accessories for men, women and children in more than 250 retail stores in 20 countries. In addition, the company offers wholesale undecorated apparel products to third-party screen printing companies. The company is vertically integrated and makes each product in its Los Angeles facilities, minimizing the use of subcontractors. The company is known for its edgy advertising, which often garners the company extensive press. APP closed November 18 at $1.22, up $0.06, with a market cap of $134.62 million. Their 52-week trading range is $0.88 - $2.40.

Vera Bradley, Inc (Nasdaq:VRA), based in Fort Wayne, IN, designs and markets fashion accessories for women, including handbags, luggage, accessories and cases. The company operates approximately 80 retail stores and offers Vera Bradley products to over 3,000 specialty retailers in the US. On November 5, the company announced new CEO Robert Wallstrom to replace Michael C. Ray, who stepped down in June.Wallstrom was most recently president of Sak's Fifth Avenue's OFF Fifth division, and brings 30 years of brand and retail experience to the table. VRA closed November 18th at $24.40, down $0.58, with a market cap of $989.15 million. Their 52-week trading range is $17.27 - $28.45.

These small cap apparel and accessory brands each represent popular Christmas gift items, from designer bags to children's clothing. With Black Friday nearly upon us, investors may wish to take a more in-depth look at small cap retail companies of all types. With consumers projected to spend $602.1 billion this holiday season, small cap retailers may well come away with a tasty slice of that pie.

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