Retail Stocks Rally as Tariffs Are Delayed -- Update
By Jessica Menton
Christmas came early for retailers.
Shares of department stores, discount chains and even toy makers
rallied Tuesday after the U.S. said it would delay some tariffs
against China until Dec. 15 on items including toys, cellphones,
laptop computers and other items that had been set to take effect
Following the announcement, electronics seller Best Buy Co.,
discount chain Dollar Tree Inc. and department store Kohl's Corp.
rallied 6.5%, 4% and 2.9% respectively. The news of the tariff
delay also spread to other retail stocks, with shares of two of the
world's biggest toy makers by sales, Mattel Inc. and Hasbro Inc.,
jumping 4.6% and 2.8% respectively.
The tariff delay comes as welcome news for retailers, which have
been caught in the crosshairs of the U.S.-China trade spat. Retail
stocks have been punished over the past year as companies have
tried to grapple with increased tariffs on goods from China. And
declining foot traffic has also continued to weigh on retailers as
shoppers continue to shift to online e-commerce giants such as
The SPDR S&P Retail exchange-traded fund, which includes
companies such as L Brands Inc., Best Buy and Guess Inc., has
slumped 21% over the past 12 months, compared with the S&P
500's 3.7% rise in that span. The ETF climbed 1.6% Tuesday, its
best one-day percentage gain since July 24.
Still, some analysts and investors anticipate that the recent
relief rally for retailers may prove to be short-lived.
"In the short run, volatility will likely continue for retailers
just because a lot of trade uncertainty still exists," said Eric
Marshall, portfolio manager at Hodges Capital Management, which has
$1.5 billion in assets under management. "The fear of the unknown
is often times worse than the eventual reality, and companies are
still unsure of how the tariffs could impact the supply chain for
Write to Jessica Menton at Jessica.Menton@wsj.com
(END) Dow Jones Newswires
August 13, 2019 16:54 ET (20:54 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.