After a tough day for retail earnings Thursday, "Fast Money" traders debated whether stocks in the sector still had any upside.
Wal-Mart posted disappointing results before the bell, reporting that earnings dipped from the previous year while cutting its sales guidance. Nordstrom followed after the bell, reporting lower-than-expected profit.
Wal-Mart shares closed the regular session 3 percent lower, while Nordstrom's stock slid nearly 8 percent in after-hours trading.
Shares of Wal-Mart, which closed the day at about $64, could dip below $60 as the retail giant continues efforts to boost sales, said trader Dan Nathan. He believes spending to compete with online retailers like Amazon could drag on Wal-Mart. Nathan owns put options in the stock.
Trader Tim Seymour, whose firm Triogem Asset Management owns Wal-Mart shares, said the stock faces a "challenging tape."
Nordstrom shares, meanwhile, could dip even more than they did during the after-hours session, argued trader Guy Adami. He believes the stock could fall to $44 per share, down from its Thursday closing price of just under $53 per share.
Adami did, however, see upside for two other retail stocks. Macy's, which has climbed more than 17 percent this year after a dismal 2015, "continues to be interesting," Adami said.
He also thinks TJX shares could climb, as the retailer has "dominated" the discount segment.
Tim Seymour is long AAPL, BAC, BBRY, DO, F, FCX, GM, GOOGL, INTC, JCP, NKE, SINA, T, TWTR, VZ, XOM. Tim's firm is long BABA, BIDU, CLF, KO, MCD, PEP, SAVE, SBUX, VALE, WMT,YHOO, short HYG, IWM.
Dan is long WMT Feb put spread, long PFE buy-write, long TWTR, long XLP put spread, long XOM Feb put spread, long UUP March calls, long GE May 28 puts, short SPY, long JPM April puts
Karen is long BAC, C, FL, GOOG, GOOGL, JPM, LYV, KORS, M, SEDG, SPY calls, URI, she is short SPY. Her firm is long ANTM, AAPL, BAC, C, C calls, FINL, FL, GOOG, GOOGL, JPM, KORS, LYV, M, MOH, NRF, PLCE, URI, her firm is short IWM, MDY, SPY. Karen Finerman is on the board of GrafTech International.
Guy Adami is long CELG, EXAS, GDX, INTC, Guy Adami's wife, Linda Snow, works at Merck.