Dead Malls of America: The Retail Apocalypse Deepens
This post Dead Malls of America: The Retail Apocalypse Deepens appeared first on Daily Reckoning.
We’re kicking off the trading week with another brutal day for the retail sector.
There’s nothing worse than a group of stocks trending lower during a roaring bull market.
These poisonous retail stocks emit a radioactive glow. Even a novice investor can’t miss these losing positions draining the gains from his brokerage account.
Traditional retailers and the “mall stocks” are having a downright terrible year. The S&P Retail Index ETF (NYSE:XRT) is down more than 11% so far this year after pushing to new lows on Monday. For comparison, the S&P 500 is up more than 8%.
Investors flipped the switch in 2017. No one wants anything to do with the traditional retailers. The divergence couldn’t be more clear…
Yesterday’s retail failures are a laundry list of household names. Macy’s Inc. (NYSE:M) plummeted 7% on the day. Gap Inc. (NYSE:GPS) dropped 6%. And poor Abercrombie & Fitch Co. (NYSE:ANF) tanked more than 21% on news that the chain ended talks of a potential sale. The stocks of an entire wing of your local mall are plummeting into the abyss right before your very eyes…
Meanwhile, Amazon Prime Day is upon us!
Coincidence?
I think not…
As a group, the retail sector is quickly approaching its winter 2016 lows (that was the trough of the 18-month broad market chop that ripped through vulnerable sectors like biotech and small-caps). Heck, the retail sector can’t even get its act together on the market’s good days in the middle of summer break. No one wants to own these old-fashioned stocks as Amazon fires up its bulldozers.
Even the formerly untouchable Costco Wholesale Corp. (NASDAQ:COST) is feeling the full weight of the Amazon juggernaut. Costco shares had enjoyed a powerful rally to new all-time highs, rising 18% year-to-date by early June. These gains have vanished less than a month later. After cratering another 2% yesterday, COST is now in the red for the year.
What’s to blame for this lightning-fast fall from grace? Amazon Prime, of course! Even MarketWatch ran an extensive report detailing how a Costco membership’s value is quickly deteriorating thanks to the exponentially increasing offerings from Amazon Prime. After all, venturing to a packed Costco superstore on a Sunday afternoon is a chore. But clicking a button on your phone to order whatever your heart desires is dead simple…
“I’d rather pay a little more for paper towels right to my door than have to deal with the Costco parking lot,” a Prime member told MarketWatch.
The slow-motion collapse of the traditional retailers is starting to pick up steam. As this story continues to unfold, the retail sector is becoming a wasteland. Jeff Bezos and his army of same-day Amazon delivery drivers have gutted every brick and mortar store in their path. Derelict shopping malls dot the country. It’s not a pretty picture.
Luckily, there’s not a buyable bounce in sight to temp the big risk-takers. Even a dead cat bounce in the retail sector could pose serious hazards to your portfolio. The pain could last a very long time as the sector struggles to adapt to a world where digital retail reigns supreme.
Be sure to log onto your Amazon account today and buy a cheap TV, slow cooker or Kindle Fire. You’ll be doing your part to help shutter another useless store at your local mall, while creating a much more convenient retail universe.
Sincerely,
Greg Guenthner
for The Daily Reckoning
The post Dead Malls of America: The Retail Apocalypse Deepens appeared first on Daily Reckoning.
This story originally appeared in the Daily Reckoning
Source: https://dailyreckoning.com/dead-malls-america-retail-apocalypse-deepens/
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If this was a free, and not nationalized, market, the prices (and other obstacles) on sellers wanting to rent space, would be lowered to meet demand. Prettymuch, anyone willing to cover operating expenses, utilities, and maintenance, would be an improvement, over letting the building rot.
I saw pics from a North Korean tourist
where food, wide roads, and buildings apparently exist, yet many are empty or go unused. I have been in households, where some privileged status is assigned to needful tools and foods, which decay in storage, and don’t see any difference with your fake mall problem, which you made to happen. This is your own fault, and you wanted it this way.
The moral of the story, afaic, is this is not a meritocracy. This is not social utilitarianism. Status has been assigned, arbitrarily, and there are not enough meaningless, social promotions to justify the mall (or the prevailing standard of living of the last 50yrs.) Your right to these amenities was just part of a narrative, which collapsed, about 20yrs, ago.
“Old Economy Steven”