2 Retail Stocks to Avoid After Black Friday Traffic Disappoints

Black Friday sales increased but reflected the supply chain challenges. According to Adobe Analytics data, customers spent about $8.9 billion online on Black Friday, slightly less than the spending in 2020. As per Sensormatic Solutions data, Black Friday traffic at retail stores was down…

28.3% from its 2019 level due to the popularity of online purchases and shoppers spreading out their holiday spending throughout the season. Moreover, the newly identified omicron coronavirus variant triggered a worldwide alarm that caused stores on Black Friday to experience the lowest level of clearance goods for sale in five years.

Given this backdrop, fundamentally weak retail stocks, The Gap, Inc. (GPS) and Nordstrom, Inc. (JWN), could be best avoided now.

The Gap, Inc. (GPS)

GPS is an apparel retail company that offers apparel, accessories, and personal care products. The company operates under the brand names – Old Navy, Gap, Banana Republic, Athleta, Intermix, and Janie and Jack.

On November 29, shareholder rights law firm Labaton Sucharow announced that it is investigating GPS on the grounds of securities violations and fiduciary duty breach claims. The company also lowered its full-year outlook.

On November 19, GPS brand Athleta opened its company-operated retail store in Yorkdale Shopping Centre in Toronto, Canada, aiming to advance the brand. However, the brand’s $2 billion net sales are not expected to be realized until 2023.

For the third fiscal quarter ended October 30, GPS’ net sales decreased 1.3% year-over-year to $3.94 billion. Net income and EPS came in at a negative $152 million, and a negative $0.40, respectively, both down 260% from the same period last year.

 

 

Although the consensus revenue estimate of $4.52 billion for the current quarter (ending January 2022) indicates a 2.2% year-over-year increase, analysts expect EPS to decrease 146.4% from the prior-year quarter to a negative $0.13 in the ongoing quarter.

The stock has declined 46.8% over the past six months and 21.6% over the past month, to close yesterday’s trading session at $17.80.

GPS’ POWR Ratings reflect this bleak outlook. The stock has a Sentiment grade of F and a Growth and Stability grade of D. In the 63-stock Fashion & Luxury industry, it is ranked #58. Click here to see the additional POWR Ratings for GPS (Value, Momentum, and Quality).

Nordstrom, Inc. (JWN)

JWN is a fashion retailer that is a shoe, beauty, accessories, and home goods provider. Its offerings include a range of brand names and private label merchandise that the company sells through different channels.

On November 29, Labaton Sucharow announced investigating JWN for breach of fiduciary duties and potential securities violation.

On November 18, JWN a…

 

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