JPMorgan doesn't think investing in retail is a binary decision to invest in Amazon (AMZN -0.4%) or the skip the sector entirely.
"It is increasingly clear to us that, in most categories, there will be one large specialty player, mass, and one dominant online player as retailers lap up smaller, less-capitalized, and difficult-to-turn-profitable online-only players, which is happening at an increasing rate," surmises the firm.
JP thinks the investable survivors will emerger as "mature low-growth, cyclical" companies that put off a lot of cash. Tractor Supply (TSCO -1.1%), Best Buy (BBY -0.1%), Dick's Sporting Goods (DKS -1.3%), Bed Bath & Beyond (BBBY -0.5%), Michaels (MIK +0.4%) and Party City (PRTY +2.8%) all the fit the JP bill.
The JP analysis suggests that a broad-based ETF might not be the best play.
Business Insider's Hayley Peterson posts a list of retailers that are going against the widespread trend of closing stores in the U.S. this year.
Topping the list are discounters Dollar General (NYSE:DG) and Dollar Tree (NASDAQ:DLTR), which are both seen as somewhat insulated from the Amazon Effect, with plans to add 1K and 650 stores, respectively.
Other companies in the sector looking to add at least 100 stores this year in the U.S. are O'Reilly Automotive (NASDAQ:ORLY), AutoZone (NYSE:AZO), Ulta Beauty (NASDAQ:ULTA), Tractor Supply (NASDAQ:TSCO) and German grocer Lidl.
Retail chains with a plan to add at least 50 stores include Ross Stores (NASDAQ:ROST), Sephora (OTCPK:LVMHF, OTCPK:LVMUY), TJ Maxx (NYSE:TJX), privately-owned Hobby Lobby, Wal-Mart (NYSE:WMT), Kroger (NYSE:KR), and Aerie (NYSE:AEO).
Despite the growth trend from the retailers listed above, Credit Suisse expects total U.S. store closures of about 8.6K this year, which would be a new record high.
Consumer spending increased just 0.3% in Q1 as a bump in inflation, delayed tax refunds and shopping ambivalence factored in. A lower level of home heating was also a consideration due to moderate weather in some areas of the U.S.
Spending on larger ticket items such as cars and home appliances dropped, while services spending also came in weak.
Economists think that consumer spending is likely to pick back up, pointing to personal savings rates and consumer confidence readings, although that momentum won't be reflected in upcoming Q1 reports from retailers such as Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Macy's (NYSE:M), Staples (NASDAQ:SPLS) and Best Buy (NYSE:BBY).
A host of companies-- ranging from Harley-Davidson (NYSE:HOG) to Procter & Gamble (NYSE:PG) -- have already tipped off some consumer spending hesitancy.
Dropping the border tax would intensify the political challenges of Pres. Trump's tax plan, according to the report, as it was supposed to offset revenue lost by other tax cuts under the plan by House Republicans; by just lowering corporate taxes, the budget deficit likely would increase, which historically has been a deal killer for most Republicans in Congress.
However, Sen. Hatch, the Republican finance committee chairman, indicated today that he may be able to support Trump’s plan to cut corporate tax rates to 15% even if it added to the budget deficit.
A better-than-expected read from Foot Locker (FL +5.1%) on comparable sales in March and April is a shot in the arm to retail stocks
The excuse heard across the sector that late tax refunds impacted February sales is getting some validation from the Foot Locker numbers. There's also some favorable earnings reports and analyst upgrades that are helping to boost sentiment.
The S&P Retail ETF (NYSEARCA:XRT) is up 1.62% on the day, compared to the 0.51% gain for the S&P 500 Index. Notable gainers include apparel sellers Destination XL Group (DXLG +5.9%), Abercrombie & Fitch (ANF +7.4%), Express (EXPR +6.6%), Genesco (GCO +5.4%), Ascena Retail Group (ASNA +5.6%), Guess (GES +4.9%), American Eagle Outfitters (AEO +4.8%), Buckle (BKE +4.7%), L Brands (LB +2.7%), J Jill (JILL +1.1%), Nordstrom (JWN +3%) and The Children's Place (PLCE +3.3%).
The rally is somewhat broad, with Wal-Mart (WMT +1.1%), Target (TGT +1.5%), Staples (SPLS +1.7%), Macy's (M +3.4%) and Best Buy (BBY +2.3%) also heading in the right direction.
Wal-Mart (WMT -0.1%) provides more details on its new Pickup Discount program to Seeking Alpha.
The company says the discounts will apply to 10K items initially before being expanded to cover more than one million items by the end of June.
"We can remove the last mile delivery costs (that represent the lion’s share of the costs to ship products to customers’ homes) when we leverage our fleet of more than 6,700 trucks to deliver products directly from fulfillment centers to our 4,700 stores," notes Wal-Mart U.S. e-commerce CEO Marc Lore.
"We’ve also been hard at work aggressively expanding our Online Grocery Pickup service which is now in 600 stores with an additional 500 coming this year," he adds.
Lore is one of the execs that Wal-Mart picked up in the Jet.com acquisition.
On a blog post today, Wal-Mart described the new e-commerce program in detail and displayed a picture of what the pickup towers in stores will look like.
Other retailers in the line of fire of the aggressive Wal-Mart e-commerce push outside of Amazon include Best Buy (BBY -0.4%), Staples (SPLS -1%), Kroger (KR +0.7%), Walgreens Boots Alliance (WBA) and Target (TGT -0.5%) to name just a few. There's also FedEx (FDX -0.8%) and UPS (UPS -0.7%) to consider.