U.S. equities are melting lower in late trading on Friday as the “Trumpcare” healthcare reform legislation looks dead-on-arrival in the House of Representatives after days of aggressively lobbying by President Trump. Wall Street is spooked since the lack of progress suggests efforts on tax reform and stimulus spending could be just as arduous — both of which are things investors have already priced into stocks.
Financials, especially big bank stocks, are leading the decline at the moment. But consumer stocks are already showing signs of weakness after a disappointing retail sales report last week and anecdotal evidence the American shopper is suddenly snapping their wallet shut.
Ford Motor Company (NYSE:F) recently warned about waning auto demand. Bebe stores, inc. (NASDAQ:BEBE) is shutting down its physical stores to attempt a turnaround as an online only company.
Here are four teen retail stocks that are not only feeling the pressure from these systemic headwinds, but are suffering from a lack of excitement in their merchandise as well:
Teen Retail Stocks to Sell: Gap (GPS)
Gap Inc (NYSE:GPS) shares have been in a holding pattern since last summer, with a short-lived rally above $30 during the post-election broad-market melt up quickly reversed for a 20%-plus decline back to the consolidation channel’s support level near $22-$23 a share. The stock is currently trading below both its 50-day and 200-day moving averages, risking a potential breakdown to levels not seen since early last year.
Comp-store sales have been a sore spot, with January comps up just 1% versus 3% in December as the high-end Banana Republic brand remains a drag. Management discontinued monthly reporting, which feels like a rage quit to me.
The company will next report results on May 25. Analysts are looking for earnings of 29 cents per share on revenues of $3.4 billion.
Teen Retail Stocks to Sell: American Eagle (AEO)
American Eagle Outfitters (NYSE:AEO) shares continue to drift lower, down toughly a third from their August high to return to lows last seen in early 2016.
Shares were pushed out of a little three-month consolidation range earlier this month in the wake of a downgrade from analysts at Bank of America Merrill Lynch; which in turn, followed the issuance of disappointing Q4 earnings and underwhelming forward guidance. Revenues dropped 0.8% from last year.
The company will next report results on May 31 before the bell. Analysts are looking for earnings of 17 cents per share on revenues of $743 million.
Teen Retail Stocks to Sell: Abercrombie & Fitch (ANF)
Abercrombie & Fitch Co. (NYSE:ANF) shares are drifting down to test critical support near the $11-a-share level, perpetuating a downtrend that goes all the way back to 2011 when prices peaked at $66.72.
The 83%-plus decline from that level nearly six years ago summarizes just how far this purveyor of pricy hooded sweatshirts has fallen as “cheap chic” and hipsterism has replaced preppy uprightness in the minds of fashion conscious teenagers.
The company will next report results on June 1 before the bell. Analysts are looking for a loss of 69 cents per share on revenues of $651.04 million. On March 10, analysts at Moody’s downgraded the company’s bonds on expectations of continued weakness as a result of the ongoing promotional environment in retail and brand challenges in its segment.
Teen Retail Stocks to Sell: Express (EXPR)
Express, Inc. (NYSE:EXPR) shares dropped out of a four-month consolidation range earlier this month, losing a quarter of its value in the process. This represents a fresh post-IPO low as the prior low of $10.47 seen in late 2012 was exceeded.
The selling was spurred by the issuance of cautious forward guidance, which eclipsed the reporting of in line results on March 8. Revenues dropped 11.3% from last year.
The company will next report results on June 7 before the bell. Analysts are looking for a loss of two cents per share on revenues of $468.3 million.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. A two-week and four-week free trial offer has been extended to Investorplace readers. Redeem by clicking the links above.
