Shares of Tiffany, Best Buy and McDonald's Drop: Is Retail in Trouble?

We saw a lot of outright breakdowns, huge drops and big volume, in top name retailers on Friday: McDonald’s (MCD), Best Buy (BBY) and Tiffany (TIF).

An independent analyst reported that based on his survey of McDonald’s franchises' December sales appear to have been weak. In addition, Friedman Billings Ramsey initiated coverage at “Hold” with a $53 price target saying that a “turn in sales trends will come” sometime and that “MCD shares are fully valued”.

McDonald’s shares, which were one of the best performers in the Dow last year, were getting crushed, down 7% on big volume.

On Friday morning, Best Buy reported a 2.1% increase in domestic same store sales for December - on a calendar comparable basis. But that was driven by video game software and hardware. Its core electronics category was of 3.1% on a comparable (though not exactly on the calendar) basis (BBY Dec Sales Press Release).

Best Buy shares were off 5%

Luxury retailer and S&P 500 component Tiffany’s Friday morning reported a 2% decline in domestic same store sales for the holiday period (Nov 1 - Dec 31)(TIF Holiday Sales Press Release).

Shares are being torched, down 12% on huge volume

I think there are two takeaways here. One, US consumer spending is weakening substantially. Two, investors are starting to take it to heart which is reflected in the fact that these shares are down so big on such big volume. People are getting out.

Disclosure: Top Gun is short McDonald’s (MCD) and Best Buy (BBY) and has no position in Tiffany’s (TIF).