Most stocks of large, traditional retailers started 2018 as they had traded at the end of last year. Down. The patterns confirms investor anxiety that the year will not bring a retail recovery.
The sentiment is something of a mystery since important data suggest holiday sales reached a multi-year record. The highly regarded Mastercard SpendingPulse research operation reported retail sales, online and stores taken together, rose nearly 5% from the start of November until midnight as Christmas Eve ended. Presumably much of this advance was e-commerce, if overall historic retail trends keep to form. That leaves investors guessing how much of the advance belongs to bricks-and-mortar.
The stocks which have suffered the worst in the most recently five trading days are Macy’s (NYSE: M) which is down 5.5% to $24.40, Sears Holdings (NASDAQ: SHLD) which is down 3.6% to $3.49, and Nordstrom (NYSE: JWN) which is down 2% to $48.28. Target (NYSE: TGT) was flat at $66.26. Only J.C. Penney (NYSE: JCP) showed a sharp rise of 9.7% to $3.66.
The drop in Macy’s should not shock anyone. It announced it would close 11 more stores, a sign of holiday trouble. Sears Holdings announced it would close 103, which will add to speculation it cannot survive the year intact.
There was a reason for the rise in J.C. Penney. It said same-store sales for November and December rose 3.4% from the same period in 2016. Pessimists about the retail’s future have to look on this improvement as close to a miracle. Notably, however, Penney shares are still down 45% over the last two years. It will have to jump impressively to show a real vote of confidence.
Most of these retailers will post earnings numbers within the next 60 days, and some may issue interim data. At that point, the real separation among the retailers will begin. And, that will truly set the tone for which retailers Wall St. thinks will make modest recoveries, and which may die.