The growing retail dominance of Amazon.com, Inc. (NASDAQ:AMZN) it set to rise a notch as the company announced a deal to acquire grocer Whole Foods Market, Inc. (NASDAQ:WFM) for $13.7 billion, the company’s largest to date.
The acquisition fits with the Seattle company’s recent push into brick-and-mortar and grocery/pantry products. And it also heads off a renewed push by competitors into the online space (for example, the purchase of Jet.com by Wal-Mart Stores Inc (NYSE:WMT)).
The result is a wave of selling pressure in the general retailer space on the fear that Amazon’s logistical prowess and scale will drive down WFM’s prices (“Whole Paycheck” and all that), addressing the weak spot that has weighed down the grocer’s revenue growth in recent years. When you mix this with the company’s existing strengths, this could well be the biggest disruption to the grocery space since Walmart’s big expansion in the 1980s and 1990s.
Here are four retail stocks that are getting hit hard:
Slammed Retail Stocks: Wal-Mart Stores Inc (WMT)
WMT shares are down 5.2% in mid-day trading on Friday, slicing below their 50-day moving average to test levels not seen since April. In a note this morning, UBS analysts warned that AMZN’s WFM purchase will remove the near-term profitability pressures its competitors face, allowing it to deeply cut prices and accelerate WFM’s same-store sales growth.
WMT will next report results on August 17 before the bell. Analysts are looking for earnings of $1.06 per share on revenues of $122 billion. When the company last reported results on May 18, earnings of $1.00 per share beat estimates by 4 cents on a 1.3% rise in revenues.
Slammed Retail Stocks: Supervalu Inc. (SVU)
Shares of grocer Supervalu Inc. (NYSE:SVU) are among the hardest hit today, down more than 13% to test levels not seen since early 2013, ending a four-month consolidation range. Tesley Advisory Group recently warned of ongoing challenges in its retail business and continuing focus on balance sheet woes.
SVU will next report results on July 25 before the bell. Analysts are looking for earnings of 9 cents per share on revenues of $3.9 billion. When the company last reported results on April 25, earnings of 13 cents per share beat estimates by 4 cents on a 0.6% rise in revenues.
Slammed Retail Stocks: Target Corporation (TGT)
Target Corporation (NYSE:TGT) shares are down 7% in mid-day trading, dropping below their four-month consolidation range. The intra-day low hit levels not seen since early 2012, representing a 40% decline from the 2015/2016 high near $80.50. The company has been battling poor sales trends following a controversial bathroom policy change, changing consumer tastes and a general shift on online sales.
In a note this morning, UBS analysts identified the WFM-AMZN deal as particularly bad news for TGT’s efforts to create a stronger, better-for-you food offering in its stores. The company will next report results on Aug. 16 before the bell.
Analysts are looking for earnings of $1.05 per share on revenues of $15.99 billion. When the company last reported results on May 17, it reported earnings of $1.21 per share (vs. 91 cents expected) on a 1.1% decline in revenue.
Slammed Retail Stocks: Costco Wholesale Corporation (COST)
Costco Wholesale Corporation (NASDAQ:COST) shares are down 6.7% in trading on Friday, losing its 50-day moving average leaving an island gap formation near $180. At the day’s lows, it also closed the gapped move higher from April. Chatter is circulating that COST has been removed from Goldman’s Conviction Buy List and has been downgraded.
The company will next report results on Aug. 24 after the close. Analysts are looking for earnings of $1.99 per share on revenues of $41.38 billion. When results were last reported on May 25, earnings of $1.40 per share beat estimates by 9 cents on a 7.8% increase in revenues.