This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Retail ETFs Face Uncertainty

Stocks in this article: XLP VDC IYK

NEW YORK ( TheStreet) -- As the economy starts to recover and consumers start to come out of their shells, retailers have begun to reap the benefits of extra spending, and some are taking steps to retain customers.

However, it remains unclear whether these bullish trends are sustainable.

According to the most recent report issued by the Commerce Department, a range of retailers boasted month-over-month gains, boosting the sector as a whole to a seasonally adjusted increase of 0.3% in February over January. Additionally, a Thomson Reuters index of 28 retailers indicates that sames-store sales (those at stores open at least one year) rose 4% in February compared with a year ago.

Of all the retail subsectors, electronics and appliances saw the largest gains, followed by groceries. Despite wary consumer sentiment over the health of the economy, illustrated by the recent decline to 72.5 in the University of Michigan/Reuters consumer sentiment index, some retail experts suggest that consumers see the light at the end of the tunnel and are starting to upgrade their appliances and add additional items to their shopping baskets at the checkout line.

A second force behind recent retails gains is retailers' adaptation to recession-induced frugality. Retailers have restricted inventories and introduced lower-cost products that are helping increase foot traffic.

High-end retailers Prada and Gucci tweaked their brands and product line to adjust to the price-conscious consumer.

Wal-Mart (WMT) has also taken steps, after noticing a recent decline in traffic. The world's largest retailer has announced that it will use aggressive pricing in grocery and other categories to attract shoppers and construct an environment where prices are too good to pass up. More specifically, the company is expected to roll back prices on 10,000 items, primarily focusing the cuts on food and other consumables.

Although consumers are willing to spend and retailers are making it easier to spend, macroeconomic factors are likely to put a damper on this upward trend.

Wages remain stagnant, consumers are taking on large sums of debt and credit still remains difficult to obtain. These are all factors that cause disposable income to dwindle. To make things even more challenging, unemployment rates are likely to remain elevated for an extended period and may even rise in the near term as some unemployed workers start to hunt for jobs again.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs