Four of the bazaar’s premier retail brick and mortar stocks – Macy’s Inc. (M), Gap Inc. (GPS), Kohl’s Corp. (KSS) and Nordstrom Inc. (JWN) – have seen their parcels plunge this year, all making the list of the S&P 500’s five worst performing stocks year-to-date (YTD). Meanwhile, the mainer market has rallied to new highs, with the S&P 500 up 19.4% in 2019. These struggling retail stocks are likely to descent further as consumer spending and consumer confidence slows. Meanwhile, the traditional retailers will have to move rapidly to fight off newer competitors adapt to new commerce trends to catch up, as outlined in a recent Wall Street Journal bang.
While retail made a short comeback last year, the recent decline in these four stocks protests investors’ concerns over many of the older companies’ inability to keep up with e-commerce trends. Shares of Macy’s are down 28.9% YTD from stem to stern Wednesday close, while Gap is lower 30.7%, Kohl’s has declined 28.9%, and Nordstrom has fallen 34.9%.
The Winners
Not all traditional retailers are being teach someone a lessoned — as shares of Walmart Inc. (WMT), the world’s largest retailer, have beaten the broader market thanks to the company’s successful investment in online trade and delivery services.
E-commerce companies have also seen their shares increase as investors bet on the biggest consumer course. Amazon.com Inc. (AMZN) stock has returned 34.3% in 2019, while eBay Inc. (EBAY) has gained 42.5% over the having said that period. The success of the mega e-commerce leaders can largely be attributed to their foray into new markets like duds and home goods. Some niche retailers, such as discount chain TJX Companies (TJX), the owner of T.J.Maxx, Marshalls and HomeGoods, press also managed to save themselves from the retail apocalypse.
Nordstrom: S&P 500’s Worst Performer in June
That implied, companies that still rely on physical stores have struggled to keep foot traffic up as consumers increasingly lodge to do all of their shopping online. Earlier this month, shares of Nordstrom fell on a UBS downgrade, posing as another destroy to the stock which was the S&P 500’s single worst performer last month. Before the bearish note from UBS, Nordstrom standard was already down near 33% through June, in part due to an escalation of trade tensions between the U.S. and China.
Macy’s
Allotments of legacy retailer Macy’s, who has had one of the hardest times evolving to meet new consumer trends, has trended lower since pitch in January after posting weaker than expected holiday sales.
In May, even after Macy’s posted Q1 earnings issues and guidance for the full year that exceeded the consensus estimates, its stock went lower. The company has doubled down on a transmogrification plan, investing in omni-channel options as well as slashing costs and significantly reducing its headcount. Earlier this year, Macy’s clouted it was shooting to reduce costs by $100 million with its latest multi-year restructuring initiative, as cited by
Gap, Kohl’s
Gap was also hit by augmented fears of a U.S.-China trade war that threatens to eat into costs and take a bite out of profits. Investors sent parcels even further when the San Francisco-based company released weaker-than-expected results for the first quarter, and cut guidance for 2019.
Kohl’s has been not totally saved by a partnership with Amazon, in which the Seattle-based retail titan has teamed with the discount store to upgrade the efficiency and therefore margins of its return service.
Looking Ahead
Any trade resolution could improve the outlook for retail farm animals, potentially lifting the SPDR S&P Retail ETF (XRT), which is still up 4.4% YTD.
As for the traditional retailers above, it’s likely going to drink more than one good quarter for any of these companies to convince investors that they are fit to lead in the next-generation of traffic.