Traditional retailers have bounced back sharply since the start of the holiday shopping season. The National Retail Federation said last week more than 174 million Americans shopped in stores and online from Thanksgiving Day through Cyber Monday, surpassing expectations.
The bounce comes at a time when many investors and analysts have given up on traditional brick-and-mortar retailers. For years, the rise of online shopping has taken market share away from these companies. E-commerce giant Amazon has been perhaps the biggest beneficiary of this change.
But the XRT is up nearly 7 percent since Black Friday. Chaikin also noted that Wal-Mart’s third-quarter earnings report — which crushed analyst expectations — showed analysts and investors that “it was possible to exist” and compete as a brick-and-mortar retailer.
Wal-Mart traded down 0.3 percent but remained near an all-time high on Monday. Gap, meanwhile, hit its highest level since 2015. Macy’s and O’Reilly Automotive shares were up 5.2 percent and 5.7 percent, respectively. Macy’s and O’Reilly, however, are still down for the year, and the XRT is barely positive for the year.
Jeff Kilburg, CEO of KKM Financial, said retail’s recent bounce was more a factor of sector rotation in the stock market, however. “We have seen technology dominate in 2016 and 2017 [while] we’ve seen retail beaten down and bruised,” he said. “I think people are trying to find value and are scraping the laggards of 2017.”
Despite the resurgence brick-and-mortar retailers have shown recently, some are skeptical about whether they can keep this up.
Maris Ogg, president at Tower Bridge Advisors, called this a “dead-cat bounce,” adding traditional retailers will continue to “lose more market share to online retailers.”