Investors in some retail stocks have more than holiday spending to worry about

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Unusually high yields are often a red flag, suggesting that payouts might be unsustainable and at risk of being cut.

Facing the fastest inflation in two generations, bloated inventories, higher interest rates and a slower economy in 2023, the leading concern going into the crucial 2022 holiday season is how retail sales are going to hold up. The evidence to date has been spotty. Target last week reported a 50% decline in fiscal third-quarter profit, missing analyst estimates. Kohl's CEO is stepping down , and the Wisconsin chain said sales are declining and withdrew its financial forecasts.

Here's a screen of high-yielding retail stocks, based on last Friday's close: Kohl's, under pressure from activist investors and its shares down 35% in 2022, now yields 6.2%. American Eagle Outfitters, whose shares have slumped nearly 40% this year, yields 4.7%. Best Buy shares are lower by more than 20% this year, leaving its yield at 4.4%. Old Navy-parent Gap today yields 4.1%.

 

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