A barrage of disappointing sales reports and guidance cuts from retailers is roiling the broad sector.
The department store sector is ground zero for the damage. Kohl's (KSS -18.1%), Macy's (M -14.5%), Nordstrom (JWN -8.9%), Dillard's (DDS -9.3%) and J.C. Penney (JCP -7.3%) are all down sharply.
Chains also bleeding include Cato (CATO -9.6%), Tailored Brands (TLRD -6.3%), L Brands (LB -7.5%), Ascena Retail (ASNA -5.7%), Francesca's (FRAN -6.5%), Stein Mart (SMRT -4.7%), Stage Stores (SSI -5.8%), Urban Outiffters (URBN -4.4%), DSW (DSW -3.8%), Express (EXPR -3.8%), Citi Trends (CTRN -4.3%).
Apparel makers Fossil (FOSL -6.5%), G-III Apparel (GIII -6.6%), Sequential Brands Group (SQBG -5.5%), Vera Bradley (VRA -4.2%) and Coach (COH -2.5%) are also getting punished.
If there's one warning to encapsulate the retail weakness it came from L Brands which cited an alarming drop in merchandise margins. It's hard to believe that Amazon (NASDAQ:AMZN) didn't have something to do with that development. By the way, Amazon is up 2.06% on the day.
A dark shadow has crossed over parts of the sector as more analysts weigh in on the negative impact of a border tax adjustment on goods sourced from outside the U.S. The GOP and President-elect Trump are expected to agree to support some form of border adjustments.
The border tax could be especially difficult for apparel and footweat companies to overcome.
Retail stocks that trade weak today amid the discussion include Deckers Outdoor (DECK -6.6%), Fossil (FOSL -5.7%), Coach(COH -3.1%), Iconix Brand Group (ICON -2.9%), Ralph Lauren (RL -2.5%), Wolverine World Wide (WWW -2.3%), Lululemon (LULU -1.7%), PVH (PVH -1.3%), Duluth Holdings (DLTH -6.1%), Boot Barn (BOOT -3.8%), Tilly's (TLYS -3.8%) and Skechers (SKX -1.2%).
Channel checks from Piper Jaffray indicate most of the consumer action last night was focused on toys, electronics and beauty. The first two categories are business as usual for the shopping event, but strong traffic at beauty stores could be an extra boost for Ulta Salon (NASDAQ:ULTA), Sally Beauty Holdings (NYSE:SBH) and e.l.f. Beauty (NYSE:ELF).
The investment firm also cited solid demand for smartwatches at Fossil (NASDAQ:FOSL) and Michael Kors (NYSE:KORS) stores, while also calling footwear traffic (NKE, UA, FL, FINL, DECK) and conversion rates encouraging.
Clothing and footwear stocks are jetting higher as more analysts bump up expectations on consumer spending in Q4 and broadly forecast tax relief for the consumer goods sector (effective tax rates paid).
Many of the names with the sharpest moves higher today are recovering from a pre-election slump.
Gainers include Sequential Brands Group (SQBG +11.7%), Iconix Brand Group (ICON +5.1%), Carter's (CRI +4.6%), Vera Bradley (VRA +4.6%), Wolverine World Wide (WWW +4%), Crocs (CROX +4.3%), Caleres (CAL +4.6%), Ralph Lauren (RL +3.4%), Fossil (FOSL +5%), Perry Ellis (PERY +3%), Deckers Outdoor (DECK +3.5%), Skechers (SKX +3.2%) and Coach (COH +3.1%).
Kate Spade (KATE +5.9%) is also rallying, but has news of an activist investor on the prowl also factoring in.
Results from Fossil (FOSL +5.3%) and Ralph Lauren (RL +8.2%) that came in ahead of some beat-down expectations are helping to provide a lift to other names in the apparel sector. The rally is focused primarily on higher-end sellers.
Cost streamlining helped to cut into weak tourism and F/X trends.