We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Coronavirus Ruins March Retail Sales: Top & Flop ETF Areas
Read MoreHide Full Article
U.S. retail sales declined 8.7% sequentially in March, after a downwardly revised 0.4% drop in February. Sales also fell shy of market forecasts of an 8% slump. It marked the steepest decline on record. The slump points to the harder-than-anticipated economic impact of coronavirus. Year over year, retail sales fell 6.2%.
Consumer spending makes up about 70% of U.S. economic activity. Thus, any contraction in it will likely drag the economy into recession. March’s sales report should serve as a guide for consumers’ future behavior. Below we highlight a few areas and the related ETFs that won/lost in the light of March retail sales.
Industries That Won
Food and Beverages
Food companies have been a winner in the pandemic as these are among the few that are operating seamlessly and are practically in high-demand due to essentiality. Food and beverage stores witnessed a sequential sales jump of 25.6% (up 28% year over year) in March, with grocery sales gaining even more (up 26.9% sequentially and 29.3% year over year). So far this year, F&B segments recorded $206.98 billion in sales, up 12.2% year over year.
Staples companies like Zacks Rank #2 (Buy) Costco Wholesale Corporation (COST - Free Report) and Zacks Rank #3 Walmart Inc. (WMT - Free Report) are likely to stay afloat as their business model revolves around consumers’ need for daily essentials.
Health & personal care stores saw a sales jump of 4.3% in March. In the first three months of the year, the segment recorded about $89.1 billion in sales, up 3.2% year over year (read: Retail Sales Scorecard 2019: ETF & Stock Winners).
Amid the ongoing virus scare, health and personal care companies like Zacks Rank #1 (Strong Buy) Clorox Company (CLX - Free Report) and Zacks Rank #3 Colgate-Palmolive Company (CL - Free Report) , Edgewell Personal Care CompanyEPC and Procter & Gamble Company (PG - Free Report) should do well.
Drug stores like Zacks Rank #2 CVS Health Corporation (CVS - Free Report) should also emerge as winners in the near term. Invesco S&P 500 Equal Weight Consumer Staples ETFRHS and First Trust Nasdaq Retail ETF FTXD are two ETF ways to tap the sales trend.
Online Stores
Non-store retail trade in March rose 3.1% sequentially and 9.7% year over year. Social distancing amid growing fears of virus contamination has been aiding the space (read: Is Coronavirus a Boon for Online Retail ETFs?).
Zacks Rank #2 stocks like WayfairW and eBay (EBAY - Free Report) should rule ahead. ProShares Long Online/Short Stores ETF CLIX is a good bet to cash in on the trend. The underlying index consists of long positions in online retailers, included in the ProShares Online Retail Index, and short positions in the bricks and mortar retailers included in the Solactive-ProShares Bricks and Mortar Retail Store Index.
Major Losers
Clothing
Clothing & accessories stores saw a huge 50.5% sequential slump in sales. The shutdown of the economy has led to a decline in footfall at malls. Also, cash-strapped consumers have cut back on discretionary purchases.
Apparel Retail takes about one-fourth of the fund SPDR S&P Retail ETF (XRT - Free Report) . The fund may face more pain ahead. On the stock front, Zacks Rank #5 (Strong Sell) Nordstrom Inc. (JWN - Free Report) should be avioded.
Restaurants
Sales at food and drinking places fell 26.5% sequentially in March and were down 23% year over year.
Leading fast-food chains like McDonald's Corporation (MCD - Free Report) and Restaurant Brands International Inc.QSR, with a Zacks Rank #4 (Sell), are the casualties here.Invesco Dynamic Leisure And Entertainment ETF PEJ that hosts several restaurant and entertainment companies may see rough times ahead.
Motor Vehicles
Motor vehicle & parts dealers witnessed a sales decline of 25.6% in March. Companies like AutoNation Inc. (AN - Free Report) , the largest automotive retailer in the United States, should suffer owing to the trend. On the fund front, First Trust NASDAQ Global Auto ETFCARZ may fall prey to this sales trend.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Coronavirus Ruins March Retail Sales: Top & Flop ETF Areas
U.S. retail sales declined 8.7% sequentially in March, after a downwardly revised 0.4% drop in February. Sales also fell shy of market forecasts of an 8% slump. It marked the steepest decline on record. The slump points to the harder-than-anticipated economic impact of coronavirus. Year over year, retail sales fell 6.2%.
Consumer spending makes up about 70% of U.S. economic activity. Thus, any contraction in it will likely drag the economy into recession. March’s sales report should serve as a guide for consumers’ future behavior. Below we highlight a few areas and the related ETFs that won/lost in the light of March retail sales.
Industries That Won
Food and Beverages
Food companies have been a winner in the pandemic as these are among the few that are operating seamlessly and are practically in high-demand due to essentiality. Food and beverage stores witnessed a sequential sales jump of 25.6% (up 28% year over year) in March, with grocery sales gaining even more (up 26.9% sequentially and 29.3% year over year). So far this year, F&B segments recorded $206.98 billion in sales, up 12.2% year over year.
Staples companies like Zacks Rank #2 (Buy) Costco Wholesale Corporation (COST - Free Report) and Zacks Rank #3 Walmart Inc. (WMT - Free Report) are likely to stay afloat as their business model revolves around consumers’ need for daily essentials.
On the ETF front, Consumer Staples Select Sector SPDR ETF (XLP - Free Report) is likely to remain steady amid the market turmoil for the same reason (read: Any Bright Spot in Q1 Earnings? Sector ETFs & Stocks to Buy).
Health and Personal Care
Health & personal care stores saw a sales jump of 4.3% in March. In the first three months of the year, the segment recorded about $89.1 billion in sales, up 3.2% year over year (read: Retail Sales Scorecard 2019: ETF & Stock Winners).
Amid the ongoing virus scare, health and personal care companies like Zacks Rank #1 (Strong Buy) Clorox Company (CLX - Free Report) and Zacks Rank #3 Colgate-Palmolive Company (CL - Free Report) , Edgewell Personal Care Company EPC and Procter & Gamble Company (PG - Free Report) should do well.
Drug stores like Zacks Rank #2 CVS Health Corporation (CVS - Free Report) should also emerge as winners in the near term. Invesco S&P 500 Equal Weight Consumer Staples ETF RHS and First Trust Nasdaq Retail ETF FTXD are two ETF ways to tap the sales trend.
Online Stores
Non-store retail trade in March rose 3.1% sequentially and 9.7% year over year. Social distancing amid growing fears of virus contamination has been aiding the space (read: Is Coronavirus a Boon for Online Retail ETFs?).
Zacks Rank #2 stocks like Wayfair W and eBay (EBAY - Free Report) should rule ahead. ProShares Long Online/Short Stores ETF CLIX is a good bet to cash in on the trend. The underlying index consists of long positions in online retailers, included in the ProShares Online Retail Index, and short positions in the bricks and mortar retailers included in the Solactive-ProShares Bricks and Mortar Retail Store Index.
Major Losers
Clothing
Clothing & accessories stores saw a huge 50.5% sequential slump in sales. The shutdown of the economy has led to a decline in footfall at malls. Also, cash-strapped consumers have cut back on discretionary purchases.
Apparel Retail takes about one-fourth of the fund SPDR S&P Retail ETF (XRT - Free Report) . The fund may face more pain ahead. On the stock front, Zacks Rank #5 (Strong Sell) Nordstrom Inc. (JWN - Free Report) should be avioded.
Restaurants
Sales at food and drinking places fell 26.5% sequentially in March and were down 23% year over year.
Leading fast-food chains like McDonald's Corporation (MCD - Free Report) and Restaurant Brands International Inc. QSR, with a Zacks Rank #4 (Sell), are the casualties here.Invesco Dynamic Leisure And Entertainment ETF PEJ that hosts several restaurant and entertainment companies may see rough times ahead.
Motor Vehicles
Motor vehicle & parts dealers witnessed a sales decline of 25.6% in March. Companies like AutoNation Inc. (AN - Free Report) , the largest automotive retailer in the United States, should suffer owing to the trend. On the fund front, First Trust NASDAQ Global Auto ETF CARZ may fall prey to this sales trend.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>