Retail Stocks Are Falling Despite Blockbuster Profits. Why the Market Doesn’t Trust the Numbers.

Home Depot easily blew past analysts’ expectations, while Walmart saw e-commerce sales nearly double. Even Kohl’s , which operates in the structurally challenged department- store sector, lost much less than expected. Yet Home Depot and Walmart were off 0.9% and 0.5%, respectively, in afternoon trading, while Kohl’s had plunged 15%.

Whether the gains will last may be less of a concern in terms of big tech, given how resilient these companies have been. Yet other areas of the market look more vulnerable, and retailers definitely fall within that group. It’s hard to ignore the worry that sales will slump as Americans tighten their belts.

RBC Capital Markets’ Scot Ciccarelli notes that the “change may give some investors pause as ‘sales sustainability’ is one of today’s key topics in retail.” He highlighted comments from management about normalizing sales trends, which “may suggest that the outsize gains experienced over the last few months may be starting to ebb.” He said RBC remains a fan of Walmart, but that other stocks the firm covers offer a better balance of risks and potential rewards.

Home Depot held on to gains longer Tuesday morning before falling into the red. That’s likely because its results looked even stronger, and the company’s foot traffic has held up relatively well. Data from Placer.ai showed that traffic was up 26% year over year in May, and that June and July visits were up by around 19%. The strength continued into early August.

Given that digital sales jumped 100% and sales trends have held up in recent weeks, that may be more about managing expectations than signaling trouble ahead. Still, costs remain high. The company will have to keep paying for stringent safety protocols even if demand tapers off as colder weather arrives.

Kohl’s will likely continue to struggle. “We think investors are underestimating issue of saturation in the U.S. retail market and, as we learned from '08 Financial Crisis, the retailers most mired in debt and lagging in omnichannel run a real risk of going bust,” writes CFRA analyst Camilla Yanushevsky.

😢

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Wall Street kicks off big retail earnings week on high noteWall Street's main indexes opened higher on Monday as retailers prepared to wind down a better-than-feared quarterly earnings season, while the S&P 500 continued to hover just below record-high levels. Wall Street doesn’t represent Main Street. The problem with the US economy in a nutshell. ME AJUDEM A COBRIR O ROMBO NA XP E ITAU, FRUTO DA GRANDE ASSESSORIA E CONTROLE DE RISCO DA XP E DOS JUROS EXORBITANTES DO ITAÚ...DIVIDA APROXIMADA 87 MIL REAIS BANCO ITAU AG 0383 C/C 67738 - 2 LUIZ ALEXANDRE...HISTÓRICO NO MEU TWITTER Due to the termination of augmented U.I. benefits, those retail 'earnings', in the coming weeks, are sure to take a nose dive.
Source: Reuters - 🏆 2. / 97 Read more »

With retail earnings on deck, traders place bets on expected winnersIt is retail's time in the spotlight. Walmart, Home Depot, Kohl's and Target are among the names reporting earnings this week. TradingNation Don’t be a trader. Be an investor. Invest for the long term based on quality fundamentals TradingNation Given that the retail sector is pretty stable and economy is recovering, wouldn't we expect most of these stocks to go up? ⬆️ On the other hand, why has Kohl's stock struggled to grow for the past few years?
Source: CNBC - 🏆 12. / 72 Read more »

VCs say these 20 retail startups will soar in 2020 during pandemic - Business InsiderBusiness Insider is a fast-growing business site with deep financial, media, tech, and other industry verticals. Launched in 2007, the site is now the largest business news site on the web.
Source: BusinessInsider - 🏆 729. / 51 Read more »

Vendor Business Strategies to Offset Impact of Retail BankruptciesRetail failures are hardest on small businesses that serve big brands. Here's how to mitigate some of the risks.
Source: wwd - 🏆 24. / 68 Read more »