Some major store chain names are lower after the retail sales report this morning showed weakness in some key categories and GameStop issued disappointing sales numbers for the holiday period.
Best Buy (BBY -0.7%), Wal-Mart (WMT -1%), Target (TGT -1.3%), Signet Jewelers (SIG -3%), J.C. Penney (JCP -1.6%), Nordstrom (JWN -1.4%) and Conn's (CONN -4%) are some of the stocks in the retail sector that are trailing market averages.
Earlier today, Stifel's Lindsay Piegza told Seeking Alpha that consumers are waiting for the proof of the Trump GDP breakout amid the reality of higher healthcare costs. At least for today, some investors may be doing the same.
Best Buy (BBY +1.1%) responds to yesterday's story posted on Seeking Alpha indicating that some Geek Squad members may be moonlighting as FBI informants.
BBY statement: "Best Buy and Geek Squad have no relationship with the FBI. From time to time, our repair agents discover material that may be child pornography and we have a legal and moral obligation to turn that material over to law enforcement. We are proud of our policy and share it with our customers before we begin any repair. Any circumstances in which an employee received payment from the FBI is the result of extremely poor individual judgement, is not something we tolerate and is certainly not a part of our normal business behavior. To be clear, our agents unintentionally find child pornography as they try to make the repairs the customer is paying for. They are not looking for it. Our policies prohibit agents from doing anything other than what is necessary to solve the customer’s problem so that we can maintain their privacy and keep up with the volume of repairs."
Some Best Buy (NYSE:BBY) employees are working as informants for the government, according to a report posted last week by OC Weekly.
While Geek Squad members are turning in evidence uncovered of child pornography as required by law, the report throws an uncomfortable spotlight on the policy of paying Geek Squad members to snoop for wrongdoing on customer computers.
Retail sales rose 3.8% on a year-over-year comparison.
A 12% increase in nonstore retailer sales and 6% rise in sales churned up by health and personal care stores (ULTA, SBH) , helped to offset the 6% drop in department store sales (KSS, JCP, [[DDS], M, JWN) and 4% tailoff in electronics and appliance store (BBY, HGG, CONN) sales.
Price deflation cut into grocery store (KR, SVU, IMKTA) sales growth. The category was up 0.1% M/M and 2.6% Y/Y.
Retail Metrics: The retail industry specialist expects chain stores to report a 1.1% increase in comparable sales during November. The estimate on October retail comparable sales was revised up to 1.5% from 1.0%. Both marks arrive against a deflation and low traffic headwind in the sector.
NPD Group: The research firm plays meteorologist by warning that the lack of "true" winter weather will hit some apparel and shoe sellers.
FBR Capital: The firm points to a strong month for Bath & Body Works (NYSE:LB).
Piper Jaffray: The retail analyst team is cautiously optimistic that Costco (NASDAQ:COST) is off to a good start.
November has been a stellar month for Target (NYSE:TGT) and Best Buy (NYSE:BBY), up 16% and 18% respectively. Both retailers trade with a ~14 forward PE ratio which has some traders buzzing that's still room left to run.
Amazon dominated a lot of the Black Friday and Cyber Monday talk, but it was Wayfair (W +4.6%) that may have posted the most impressive online sales growth vs. expectations. Shares of Wayfair are still 28% below their 52-week high, although valuation isn't for the feint of heart.
At home on Seeking Alpha, there's been some good discusssion on the impact of the reduction of SNAP benefits (nutrition assistance) in the U.S. on the retail sector. Tomorrow's earnings report from Dollar General (NYSE:DG) and the firm's conference call Q&A could shine a light on that wildcard.
Cyber Monday online sales increased 12.1% to $3.45B, according to an updated tally from Adobe.
Mobile spending was up 34% Y/Y to $1.07B to account for 31% of sales.
Conversion rates were highest for desktops at 6.3%, while smartphones (2.8%) and tablets (5.1%) were still above holiday averages.
Holiday shopping season sales through November 28 are up 7.6% to $39.97B.
The S&P Retail ETF (NYSEARCA:XRT) is up 1.81% over the last week to outpace broad market averages. The list of outperformers over the last week -- which factors in the pre-Thanksgiving buzz, Black Friday reports, and Cyber Monday numbers -- includes Target (NYSE:TGT), Wal-Mart (NYSE:WMT), Hasbro (NASDAQ:HAS), Mattel (NASDAQ:MAT), Staples (NASDAQ:SPLS), DSW (NYSE:DSW), Barnes & Noble (NYSE:BKS), Dollar Tree (NASDAQ:DLTR), Dollar General (NYSE:DG), Burlington Stores (NYSE:BURL), The Children's Place (NASDAQ:PLCE) and Best Buy (NYSE:BBY). An interesting sidenote is that all the retail names listed above topped the return of Amazon for the 5-session period.
Best Buy (BBY +11.7%) rallies to its highest share price since 2010, touching $45.39 at its high point just minutes ago.
Raymond James was the investment firm that came into the report with a Strong Buy rating on the retailer. The recent quarter supports RJ's theme that Best Buy's margins will continue to improve due to tight expense control.
Keybanc notes that growth in home theater, mobile phones, wearables and connected home was offset in part by a decline in gaming.