Four of the five worst-performing S&P 500 stocks in the first half of the year were department stores. A few days into the second half of 2019, there is no indication that trend is changing.
Nordstrom, which finished June with the dubious distinction of the S&P 500’s worst performer, lost 2.3% Tuesday after UBS became the latest in a string of firms to lower its rating for the stock.
The selling pressure spilled over more broadly in the retail sector: Macy’s and Kohl’s were also among the five biggest S&P 500 decliners in the first half of the year, fell 1.3% and 1.1% respectively. Gap Inc.. fills out the roster. And, JCPenney is down 55% for the 12 month period.
The disruption is not about retail in general: Walmart, Target, Costco, Marshall’s, Ross Stores, Home Depot, Lowes and others are showing growth in sales and earnings.
The study shows increased polarization, with luxury and value advancing and mid-market players falling behind. “Well-known European luxury companies tended to be overrepresented in the top 20, with North American companies coming in a close second.”
Over time North American department stores lost out, with none remaining in the top 20, compared with three 10 years ago — a stark illustration of the fragility of the traditional retailing model.
The report states that 20% of companies represent 128% of the total industry economic profit.