A Disaster of a Week for Retailers
This past week has been perhaps the worst week the markets have seen in months, and one industry was particularly battered. Retail stocks were hit hard, some after they reported earnings and some even in anticipation of a bad report. This was seen across the board, and the carnage looks to continue.
A growing trend that could stand to hurt these retailers even more is the proliferation of e-commerce. Amazon.com Inc. (NASDAQ: AMZN) is close to its all-time highs, as the company continues to build momentum into the holiday season with increasing sales that seem to be taking away from retailers in general. Not to mention other strong e-commerce companies, Alibaba Group Holding Ltd. (NYSE: BABA) recently had a very strong Singles Day in which it roped in about $14 billion in gross merchandise revenue.
At the start of the week, we looked into two of the largest retailers in the space, Target Corp. (NYSE: TGT) and Wal-Mart Stores Inc. (NYSE: WMT), in terms of their valuations. We came to the conclusion that maybe Target might be more attractive than Wal-Mart at this point, but that was before this week turned out to be an absolute disaster for many of America’s key retailers.
Target’s shares were trading down 3% at $72.66 on Friday, with a consensus analyst price target of $84.91 and a 52-week trading range of $66.50 to $85.81. Over the course of the past week, the stock dropped 4%, while year to date it is flat.
As for Wal-Mart, over the course of the past week shares dropped 2.8%, while year to date the stock is down 32%. Shares traded at $56.82 on Friday, with a consensus price target of $62.83 and a 52-week range of $56.30 to $90.97.
J.C. Penney Co. Inc. (NYSE: JCP) reported its earnings on Friday before the markets opened. The company had a net loss of $0.47 per share on $2.9 billion in revenue. The consensus estimates from Thomson Reuters called for a net loss of $0.55 per share on revenue of $2.88 billion. Over the past week, shares rose 1.3%, while year to date the stock is up nearly 36%. Shares traded down more than 13% at $7.58 on Friday. The consensus price target is $10.05, and the 52-week range is $5.90 to $10.09.
Nordstrom Inc. (NYSE: JWN) reported weaker-than-expected earnings Thursday after the markets closed. The higher-end apparel and accessories department store retailer has seen its shares pounded since. The overall trends here just aren’t what investors would have hoped for, and that is even after expectations were not really that high going into the report. Last week, shares dropped 4.8%, while year to date the stock is down 13%. Shares traded down 16% at $53.33 on Friday, in a 52-week trading range of $50.43 to $83.16. The consensus price target is $77.48.
Macy’s Inc. (NYSE: M) has been in total free fall since July, falling 36% from its 52-week highs. Much more important than its just-released earnings for signaling a turnaround will be its fourth-quarter earnings posted after the holiday season. That will be tough, considering that fewer seasonal workers are being hired this year than in the past. Shares dropped 19% last week, while year to date there are down nearly 37%. They traded down nearly 3% on Friday to $39.70. The consensus price target is $55.00. The 52-week trading range is $39.05 to $73.61.
Gap Inc. (NYSE: GPS) actually has done better than its initial indications might have led investors to believe in its most recent earnings report. A 15% drop in Banana Republic sales and a 4% drop in comparable Gap global sales were not offset by only a 2% gain in Old Navy global sales. Net sales fell to $1.2 billion from $1.26 billion in the prior year’s month of October, and quarterly sales were down by 3% at $3.86 billion. In the past week, shares dropped 6.5%. Year to date, the stock is down 35%. Shares traded down more than 4% at $25.39 on Friday, with a consensus price target of $28.94. The 52-week range is $25.21 to $43.90.
Urban Outfitters Inc. (NASDAQ: URBN) has yet to report its earnings for the fiscal third quarter, but the sentiment from the other major retailers has dragged this stock down as well. Shares dropped 11% last week, while year to date the stock is down 25%. On Friday, shares were down over 4% at $24.88. The consensus price target is $37.32, and the 52-week range is $24.83 to $47.25.
It’s worth noting that even TJX Companies Inc. (NYSE: TJX) tanked, and it reports next week a well. It seems odd considering how much the “close out” and “discounting” comments have been. Over the past week, shares dropped nearly 8%, while year to date the stock is flat. Shares were down more than 4% at $65.16 on Friday, with a consensus price target of $81.39 and a 52-week range of $59.69 to $76.93.