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Retail analyst: How to play the holidays

Fred Imbert
Updated

This holiday season will be a different one for retailers, retail analyst Dana Telsey said Friday.

"I think it's going to be a decent season, but it's going to be category-specific. It's not going to be the apparel season that we've had in years past," the CEO of Telsey Advisory Group told CNBC's " Squawk Box ." "Sporting goods [and] everything for the home: that's where all the action is going to be this holiday season."

Shares of Nike (NYSE: NKE) and Home Depot (NYSE: HD) have outperformed the rest of the Dow Jones industrial average (Dow Jones Global Indexes: .DJI) this year, gaining 39 percent and 28 percent, respectively. They have also contributed the most gains to the blue chips index.

Nike stock YTD

Source: FactSet

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"If you're not in one of those categories, you're going to have a really hard time. We've had a very warm seasonal fall selling season, we had a later Labor Day, [and] you're not selling a lot of coats out there," Telsey said.

She said the warmer weather leads to higher inventories, which could benefit consumers. "Consumers are going to get a great deal, not so great for profits of the retailers," she said.

Susan Anderson, a retail analyst at FBR Capital Markets, said Friday the big winner from the holidays will be Under Armour (NYSE: UA).

"[Consumers are] looking for more leisure activities because its outdoors, which is why we are focused more on athletic retailers," she told " Squawk on the Street ."

Under Armour's stock has gained nearly 35 percent in 2015 and over 18 percent in the last six months.

Under Armour stock YTD

Source: FactSet

Other big winners from this holiday season could be toy retailers, especially Toys R Us, given the first uptick in U.S. births last year — the first one since 2007 — as well as the upcoming release of "Star Wars: The Force Awakens," said Charles O'Shea, senior retail analyst at Moody's.

"[Toys R Us] is kind of at an inflection point this holiday," he told "Squawk on the Street." "We think that, for all intents and purposes, the holiday really kicked off in September when Wal-Mart (NYSE: WMT) and Target (NYSE: TGT) and Toys and Amazon (NASDAQ: AMZN) went deep on promotions for the 'Star Wars' toy launch. That momentum probably will be restarted given that the movie is launching in a few weeks," he said.

Overall, the retail sector has taken a hit recently, with the SPDR S&P Retail ETF (XRT) (NYSE Arca: XRT) shedding over 7 percent in the last six months.

Big-name retailers like Macy's (NYSE: M) and Nordstrom (NYSE: JWN) have not been spared any pain either, with each stock falling about 40 percent and over 20 percent in the last six months, respectively.



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