Telsey Forecasts 5.0-5.5% Holiday Retail Growth, Names Top Stock Picks for 2026

Telsey Advisory Group is projecting a solid holiday shopping season, forecasting U.S. retail sales growth of 5.0% to 5.5% for 2026. In a report published Tuesday, the firm identified several consumer retail stocks across multiple categories that it believes are positioned to outperform the market.

Holiday Sales Outlook

Telsey's forecast represents a moderation from the 6.9% growth recorded in 2025 but an acceleration from the 4.7% increase seen in 2024. The firm's outlook is derived from a bottom-up analysis of more than 175 publicly traded companies.

Direct-to-consumer sales are expected to remain a powerful engine of growth, with Telsey projecting a 13.0% increase this holiday season. This figure nearly matches last year's robust growth of 13.1% and significantly outpaces the 10.0% gain from 2024, highlighting the continued shift in consumer shopping habits.

Telsey's 'Outperform' Rated Stocks

The advisory group highlighted several companies it expects to lead the market, assigning them "Outperform" ratings. Key picks include:

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• Academy Sports and Outdoors (ASO): With a $63 price target, the retailer is expected to achieve 3.0% growth, driven by new store openings and strong merchandising in outdoor and team sports.
• On Holdings (ONON): The athletic brand earned a $43 price target. Telsey forecasts exceptional 22.4% growth, citing global market share gains, direct-to-consumer expansion, and new product launches.
• Ralph Lauren (RL): Assigned a $470 price target, the firm is viewed as a winner due to its successful brand elevation strategy and appeal to a younger, high-net-worth customer base.
• Ulta Beauty (ULTA): The beauty retailer received a $715 price target. Telsey pointed to its strong omni-channel capabilities, loyalty program, and diverse brand portfolio as key competitive advantages.

Diverging Fortunes Across Retail

Telsey's analysis also underscores a significant divergence in performance across retail segments. While the broader beauty and personal care segment is forecast to grow a modest 2.5%, the department store channel is projected to contract by 1.5%, following a 2.1% decline last year.

Reflecting this trend, Telsey assigned Kohl's Corporation (KSS) a "Market Perform" rating with an $18 price target. The firm noted that while merchandising improvements and disciplined inventory management at Kohl's could support improved trends, the company operates within a persistently challenging sector.