Lagging Retail Stocks Will Soon Face Their Next Big Test
November 13 2019 - 12:37PM
Dow Jones News
By Akane Otani
Friday is shaping up to be a big day for retail stocks.
The group has generally lagged behind the broader market this
year, hurt by investor worries about store closures, tariffs and
declining sales among bricks-and-mortar outlets.
The SPDR S&P Retail exchange-traded fund has risen about
7.4% in 2019, trailing behind the S&P 500, which is up 23%.
Investors will get their next look at whether the group might be
able to stage a rebound Friday, when the Commerce Department
releases retail sales figures for the month of October.
Last month's report fell short of analysts' expectations.
Spending at stores, restaurants and online outlets decreased a
seasonally adjusted 0.3% in September from the prior month, marking
the first decline since February and disappointing economists who
had expected a slight pickup in spending.
That was a fresh setback for the group. While discount retailers
and e-commerce stocks like eBay Inc. and Amazon.com Inc. have
logged double-digit percentage gains for the year, thanks to robust
spending online, many specialty retailers and department stores
have fared far worse. GameStop Corp., for instance, is down 53% for
the year; Signet Jewelers Limited is down 47%, and Macy's Inc. is
off 46%.
Friday's report will be key "not only for the critical
implications for consumption and its role in the broader growth
picture, but also as a confirmation or refute of last month's
troubling headline decline," said Ian Lyngen, head of U.S. rates
strategy at BMO Capital Markets, in a research note.
The upside? Economists do expect some improvement for Friday's
report. Those surveyed by The Wall Street Journal are forecasting a
0.2% increase in retail sales for October. Excluding auto sales,
which were a major drag on September's results, that estimate rises
to 0.4%.
Stay tuned to see if retail stocks can turn a tough 2019
around.
Write to Akane Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
November 13, 2019 12:22 ET (17:22 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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