Q: Why are investors souring on retailers?
A: Investors thought retail stocks were money in the bank. But that changed after the holidays.
Some retail stocks suffered a tough start to 2014 after a number of well-known companies issued warnings about the fourth quarter, or shortfalls. Retailers ranging from Sears and Ross Stores to Lululemon, Amazon.com and Wal-Mart stunned investors, saying the holiday period wasn't that great. These revelations have soured investors not just on retail, but on markets in general.
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Shares of the SPDR S&P Retail exchange-traded fund have fallen nearly 10% so far this year as investors digest the warnings. Earnings warnings from consumer discretionary stocks, which includes retail, hit their highest level since the economy's trouble in 2008, says John Butters of FactSet.
Investors had high hopes for Internet retailers, but after Amazon missed expectations, investors are questioning this area, too. That's not to say all retailers are disappointing. Some other retailers including Macy's and Nike continue to see areas of growth beyond expectations. Retailers are increasingly pulling apart from each other, with the strong ones putting up robust growth as the weaker players fade away.
Follow Matt Krantz on Twitter: @mattkrantz.
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