Despite Strong Holiday Sales, Retail Stocks Are Having Their Worst Quarter Since 2008

With consumer confidence high, unemployment low and spending looking strong for the latter months of the year, U.S. retailers should be riding a wave of good tidings this holiday season — but instead, the industry is roiling from a stock market sell-off.

So far this quarter, S&P’s index of 95 top retailers has dropped 18 percent, wiping out the gains many of these companies made in the year and putting the sector on track for its worst quarter since 2008.

These losses are particularly striking since, by many accounts, retail is doing better than it has in years. The National Retail Federation predicts that holiday retail sales during November and December will increase between 4.3 and 4.8 percent over the same period last year, and the Commerce Department last week reported core retail sales growth for November that topped analysts’ expectations, while revising October’s figures upward.

So what’s behind the downturn on Wall Street? Analysts have pointed to global economic anxieties, including Brexit in the U.K., “yellow vest” protests in France and a cooling economy in China, in addition to the ongoing trade war between China and the U.S. as key factors making investors cautious in the lead-up to 2019.

Even retailers that seem to have evolved, rather than floundered in the face of Amazon, have taken a beating since October: Target’s shares are down more than 27 percent in the fourth quarter, while Macy’s have dropped 13 percent.

The sell-off isn’t solely concentrated in one end of the market, either: luxury brands and mass merchants alike are weathering the storm, which could very well continue into the new year. Tiffany’s, for one, has seen its stock fall 37 percent this quarter on news that Chinese tourists aren’t spending as much as they used to, while embattled J.C. Penney has sunk 30 percent in the same period and is now trading at close to $1 per share.

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