Retailers shuttering stores, slowing foot traffic in brick-and-mortar locations, and e-commerce players like Amazon and Wayfair gaining market share ... Sound familiar? This has been the narrative for much of the industry, following a disappointing start to 2017.
Department store operators Macy's, Dillard's, Kohl's, Nordstrom and J.C. Penney each reported first-quarter results last week that sparked a selloff in the sector. The S&P 500 Retail ETF (XRT) ended the week in red territory, marking its worst 5-day performance since March.
Now, Wall Street is preparing for an onslaught of more retailers' earnings to come — but it's a different mix of companies reporting, some of which could turn this discouraging narrative around.
"The problem plaguing [department stores], and much of the industry, has been the inability to grow the top line in the wake of declining foot traffic," Ken Perkins of Retail Metrics wrote in a report. But that foot traffic hasn't left the retail industry entirely just yet — it's merely shifting to other types of stores.
"Department stores continue to lose market share to online competition and off-price retailers, which sell designer clothing for less," Thomson Reuters' Jharonne Martis wrote in an update to investors last week.
Off-price champion TJX Companies — the parent of TJ Maxx, Marshalls and HomeGoods' discount stores — is scheduled to report earnings after the bell on Tuesday.