Executives at most of the major retailers were confident in recent third-quarter earnings calls that shoppers will show up at stores and online in full force this holiday season. But skeptical investors were unconvinced and sold off their shares en masse Tuesday.
Shares of Target tanked more than 10.5 percent Tuesday on the heels of its earnings report, as Kohl's stock tumbled 9.2 percent, Ross Stores fell 9.4 percent, and Lowe's fell nearly 6 percent. Their lackluster earnings reports also drove the shares of other companies such as Under Armour, Tapestry and Home Depot into the red.
Best Buy was the one major retailer that saw its shares climb for the day, closing up more than 2 percent, after its quarterly earnings and sales topped Street expectations. The electronics retailer's stock stumbled by nearly 2 percent earlier in the day, falling with much of the companies included in the S&P 500 Retail ETF. The index of retail stocks fell 3.3 percent Tuesday and 11.4 percent over the last eight trading days.
"Everything we are seeing about the consumer is very positive," Best Buy CEO Hubert Joly said on a call with reporters Tuesday. "The consumer is in great shape, there is no doubt."
Holiday sales are expected to grow near 5 percent this year. Low unemployment in the U.S., coupled with rising wages, are giving companies such as Macy's and Walmart confidence to predict they'll sell more this year than in past holiday seasons. Walmart CEO Doug McMillon said there is"momentum in the business as we execute our plan and benefit from a favorable economic environment," according to a statement posted on its web site after it reported earnings last week.
Target CEO Brian Cornell mirrored Joly and McMillon, telling reporters on a conference call Tuesday that consumer spending is still strong.
"There is no indicator as we sit here today that the consumer environment is slowing as we enter the holiday season," Cornell said.
He raved about the U.S. economy earlier this year, saying it was one of the best he'd ever seen in his career.