This could be the best back-to-back holiday season in more than five years, but a top Wall Street retail analyst says that many of the retail sector's troubles will persist even during the Christmas season. Some stores and brands should be strong through the end of the year, but investors who want to cash in on the holidays need to be thoughtful shoppers when it comes to retail stocks.
"Retail is still a difficult industry mired in e-commerce-based disruption. There are more store closures and more bankruptcies in the past two years than over the past five years combined," said Matthew Boss, J.P. Morgan's equity research analyst focusing on retailing, department stores and specialty retail, in an interview with CNBC on Thursday.
Last week, Lowe's said it would close 20 U.S. stores and 30 in Canada, while Sears said it would close another 40 stories on top of the 142 stories it already announced would be closing. Boss said that rising wages and transportation prices aren't helping the bricks-and-mortar retailers competing with Amazon either.
It is not always as simple an equation as holiday sales periods equal e-commerce outperformance. Alibaba just recorded its biggest Singles Day sales ever with over $30 billion in sales, but historically, the Chinese e-commerce giant hasn't seen a strong correlation between holiday bumps and its stock price. Singles Day sales are five times as high as the U.S. equivalent, Black Friday, and yet over the past decade, Alibaba shares have averaged a four percent decline in the month after the November holiday, according to data from markets analytical service Kensho.