It appears that the back-to-school bargains weren’t enough to entice shoppers this year. According to the Commerce Department, retail sales fell 0.3% in August. Not only did this miss the consensus estimate of a 0.1% decrease, this also marked the first decline since March.
Breaking it down, eight of the 12 retail categories experienced declining sales. Auto sales dropped 0.9%, gas station sales declined 0.8%, department store sales dipped 0.6% and sales at home improvement stores fell 1.4%. Meanwhile, restaurant sales jumped 0.9% and apparel sales increased 0.7%.
What really surprised economists is that, even excluding auto sales, retail sales still dipped 0.1%. Economists had expected this measure to rise 0.3%. In better news, July retail sales were revised higher to reflect a 0.1% gain; the earlier report showed flat sales.
What’s interesting is that by all accounts, consumers should be spending more. With gasoline costs as low as they are, Americans have more disposable income to put towards other purchases. Inflation has been nonexistent, and the latest reports suggest that consumer confidence is on the rise.
So, the August report shows just how challenging of an environment it is for retailers. In light of these results, I’ve prepared a list of 19 retail stocks to sell. These companies have been struggling for some time, so if you own any of these stocks you may want to consider cutting your losses:
|Ticker||Company Name||Quantitative Grade||Fundamental Grade||Total Grade|
|AAP||Advance Auto Parts Inc.||F||C||D|
|ANF||Abercrombie & Fitch Co.||D||D||D|
|BKS||Barnes & Noble, Inc.||D||C||D|
|GPS||The Gap, Inc.||F||C||D|
|LB||L Brands, Inc.||F||C||D|
|ODP||Office Depot, Inc.||F||C||F|
|PIR||Pier 1 Imports, Inc.||F||D||F|
|SHLD||Sears Holdings Corporation||F||C||F|
|SIG||Signet Jewelers Limited||F||C||D|
|TIF||Tiffany & Co.||F||C||D|
|VSI||Vitamin Shoppe, Inc.||F||C||D|
However, that’s not to say that all retail stocks should be avoided. In my flagship newsletter service, Blue Chip Growth, I currently recommend a handful of high-quality retailers. Current members can view the complete Buy List here. If you’re not currently a member, but are interested in learning more, you can click here.