It’s been nothing but bad news for the retail sector lately, with structural headwinds from a weak U.S. consumer to online competition like Amazon.com, Inc. (NASDAQ:AMZN). The news is filled with reports of weak traffic, struggles for mall operators and a decline in retail spending.
The woes for the American shopper are a bit of a head-scratcher given the unemployment rate is at 4.4%, personal income growth is steady and energy prices have recently weakened.
Yet indicators suggest something is amiss: Gasoline demand is dropping at a rate not seen since 2011, retail sales have been sliding for months, and the personal savings rate has been ticking higher. Caution, not confidence, is in the air.
These headwinds are mixing with some additional, company-specific woes to batter these three retail stocks:
Battered Retail Stocks: Best Buy (BBY)
Best Buy Co Inc (NYSE:BBY) shares were pushed below their 50-day moving average on Monday after reports Amazon is looking at starting its own tech installation/setup service like its popular “Geek Squad” offering. If so, this is yet another area where Amazon is pressuring BBY’s top line amid the ongoing problem of “showrooming” electronics products in its stores only for shoppers to place their order online.
The company will next report results on Aug. 24 before the bell. Analysts are looking for earnings of 63 cents per share of BBY on revenues of $8.6 billion. When it last reported on May 25, earnings of 60 cents per share beat estimates by 20 cents on a 1% rise in revenue. Watch for a possible decline to the 200-day moving average, which would be worth a 10%+ decline from here.
Battered Retail Stocks: O’Reilly Automotive (ORLY)
O’Reilly Automotive Inc (NASDAQ:ORLY) shares are melting lower, down some 40% from its January high amid a general slowdown in automotive — vehicle sales have been stalling, new car inventory rising and demand fading — as well as indications consumers are forgoing even basic maintenance. Shares were hit hard last week after management lowered its Q2 comp-store sales guidance to 1.7% from 3%-5% previously.
The company will next report results on July 26 after the close. Analysts are looking for earnings of $2.94 per share of ORLY on revenues of $2.3 billion. When the company last reported results on April 26, earnings of $2.60 per share missed estimates by 28 cents on a 2.9% rise in revenues.
Battered Retail Stocks: Abercrombie & Fitch (ANF)
Abercrombie & Fitch Co. (NYSE:ANF) shares were slammed to lows not seen since 2000 — yep, 17 years ago — after management indicated it’s stepping away from discussions to sell the company to focus on its turnaround plan. Down a whopping 85% from its 2011 high, investors don’t have much faith in that idea obviously amid growing evidence millennial shoppers just don’t care much about the brand’s “preppy, shirtless” image established in the late 1990s.
The company will next report results on Aug. 24 before the bell. Analysts are looking for a loss of 33 cents per share of ANF on revenues of $756.5 million. When the company last reported on May 25, a loss of 72 cents per share was 2 cents worse than expected on a 3.6% drop in revenue.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
