A Bearish Paradigm Shift For Retail Stocks

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Includes: EMTY, FDIS, FTXD, FXD, JHMC, PMR, RCD, RETL, RTH, VCR, XLY, XRT
by: Hedgeye
Summary

Recently, we warned that the acceleration in Retail, driven by "brick and mortar" sales would be ending soon.

The landscape has changed once again. E-commerce sales are picking up relative to brick and mortar.

We are bearish on Retail stocks.

This past June, Hedgeye Retail analyst Brian McGough warned that the acceleration for retail driven by “brick and mortar” sales would be ending soon.

As of a couple weeks ago, we officially crossed the Rubicon where McGough predicted that brick and mortar will get outpaced by e-commerce for the foreseeable future.

With a much greater margin benefit for brick and mortar versus e-comm, that shift could have a major bearish impact on Retail stocks (XRT).

This is a really critical point for retail,” McGough explains in the video above.

“Sales are incrementally happening more in e-comm than they are for brick & mortar. That is a huge decremental margin hit and it started a couple of weeks ago.”

Watch the full video above for more.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.