The U.S. retail industry has been disrupted by online retailer Amazon (AMZN) - Get Report and shifts in consumer behavior. Earnings reports for the likes of Walmart (WMT) - Get Report , Target (TGT) - Get Report and others are starting to show which retailers are dying and which are thriving in this new environment. Here are three charts that tell the tale.
No. 1: Selective Spending Disruption
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Non-store retailers demonstrated the strongest year-over-year sales growth in April, followed by building material/garden retailers and health and personal care stores. Both these areas of retail are less susceptible to e-commerce competition. Stores like Home Depot (HD) - Get Report and Lowe's (LOW) - Get Report benefit from the fact that consumers don't buy merchandise like mulch and lumber online. Drug store and beauty retail requires more hands-on consultation, giving it a competitive advantage versus nonstore retail.
Dollar stores and discount retailers also posted strong retail sales results suggesting the consumer continues to be price conscious. And yet paradoxically, they still appear willing to spend on experiences like dining out, concerts, automobiles, fitness, and must-have items like pricey yoga pants.
No. 2: Retail Earnings Disruption
First quarter internet retail earnings were through the roof, up more than 143%, propelled by strong results from companies such as Amazon and Expedia (EXPE) - Get Report . On the other hand, department store retailers are struggling with earnings growth, declining more almost 48%. Big-box retailers and consumer electronics chains also remain challenged. There is a huge earnings disruption going on in retail!
No. 3: Clicks Over Bricks
Another demonstration of the bifurcation in retail is the recent performance difference between the Amplify Online Retail ETF (IBUY) - Get Report and the S&P Retail ETF (XRT) - Get Report . Using these ETFs as proxies for online and traditional retail, over the last month the performance differential is 5.9%. At least over the last month, the clicks have beaten the bricks.
Jane Edmondson is a registered investment advisor serving both private clients and other investment advisors. Her firm, EQM Capital LLC, is headquartered in San Diego, California. She has more than 20 years of financial experience in the investment industry and worked for more than 12 years as in Institutional Investment Analyst and Portfolio Manager before founding her own firm in 2013. She holds an MBA in Finance from San Diego State University and a BA degree in English from UC Irvine.