Fears over Covid-19 have been pummeling retail stocks on and off since early 2020. Even now, after vaccine campaigns have significantly improved the outlook for the pandemic in the US and other wealthy countries, renewed concerns around the virus could make for a rocky recovery.
On Thursday morning, shares of several major retail companies fell before making partial recoveries — a rollercoaster cycle that could continue as news about new outbreaks, vaccine breakthroughs and variant fears shakes markets.
Macy’s, Abercrombie & Fitch and Stitch Fix were among the companies that saw their share prices sink sharply in morning trading, dropping as much as 6% before rebounding to levels near yesterday’s close. The SPDR S&P Retail ETF likewise fell by more than 3% this morning, but had mostly recovered by noon.
Analysts tied the early selloff to several virus-related news items, including Wednesday’s announcement by the US Centers for Disease Control and Prevention that the highly transmissible Delta variant has become the dominant Covid-19 variant in the US, as well as the revelation that Japan will hold the Summer Olympics without spectators after declaring a state of emergency due to spiking coronavirus cases. The worldwide death toll from the virus also hit a grim milestone of 4 million late Wednesday.
While many experts expect a bumpy road ahead for economic recovery, retail stocks have had a strong run so far in 2021 as stores have reopened and consumers have begun spending more on footwear and apparel. The SPDR S&P Retail ETF has soared more than 48% this year, closing at $94.74 yesterday, up from a low of $29.78 in March 2020. Foot Locker’s shares are up more than 55% since January, while Revolve Group has surged 108.4% and Abercrombie & Fitch is up more than 112%.