$SHLD PART ONE/ 4 Retail Stocks On The Verge Of B
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Posted On: 05/08/2017 11:41:05 AM
$SHLD PART ONE/ 4 Retail Stocks On The Verge Of Bankruptcy
By Josh Enomoto, InvestorPlace Contributor
https://dynamicwealthreport.com/4-retail-stoc...ankruptcy/
Sears isn't the only troubled retailer -- these specialty retail stocks are caught in its wake
Amid the noise of tax reform, geopolitical tensions and making America great again, one conspicuous element rankles President Donald Trump — the retail industry is suffering from a bifurcated dynamic. On one hand, the e-commerce sector is on a roll. On the other, traditional brick-and-mortar stores are hit with a dearth in foot-traffic. That has plagued formerly prominent retail stocks, moving some to the brink of bankruptcy.
The most infamous example is Sears Holdings Corp (NASDAQ:SHLD). Late last year, InvestorPlace feature writer James Brumley stated frankly that Sears “is officially a lost cause.”
Dramatically poor earnings performances, combined with the hemorrhaging of sales and cash flow, makes this an easy call. As another InvestorPlace contributor, Lawrence Meyers, writes, “Asset sales can only solve so much.” But the worst part is that Sears’ bankruptcy woes affected other unrelated retail stocks.
Without a major entity like Sears, the business model for retail real estate investment trusts (REITs) will spike in difficulty. REITs love these giant firms because they 1) pay “yuge” rental fees and 2) attract other businesses. Losing these whales would intractably stress REITs, and later, the retail stocks of smaller companies.
Although consumer sales volume is up, e-commerce is grabbing a larger share of the pie. That won’t impact sectors such as groceries or home improvement, as these items are purchased on an as-needed basis. However, almost every other discretionary sector, especially including specialty products, is at risk. People no longer want to drive to physical stores when they have the option of shopping online.
Companies without secular demand (ie. groceries) or broad appeal are going to endure a backlash in this new consumer economy. Some names, like Sears, can’t take much more before bankruptcy becomes the only option. Here are four retail stocks that are playing with fire...
By Josh Enomoto, InvestorPlace Contributor
https://dynamicwealthreport.com/4-retail-stoc...ankruptcy/
Sears isn't the only troubled retailer -- these specialty retail stocks are caught in its wake
Amid the noise of tax reform, geopolitical tensions and making America great again, one conspicuous element rankles President Donald Trump — the retail industry is suffering from a bifurcated dynamic. On one hand, the e-commerce sector is on a roll. On the other, traditional brick-and-mortar stores are hit with a dearth in foot-traffic. That has plagued formerly prominent retail stocks, moving some to the brink of bankruptcy.
The most infamous example is Sears Holdings Corp (NASDAQ:SHLD). Late last year, InvestorPlace feature writer James Brumley stated frankly that Sears “is officially a lost cause.”
Dramatically poor earnings performances, combined with the hemorrhaging of sales and cash flow, makes this an easy call. As another InvestorPlace contributor, Lawrence Meyers, writes, “Asset sales can only solve so much.” But the worst part is that Sears’ bankruptcy woes affected other unrelated retail stocks.
Without a major entity like Sears, the business model for retail real estate investment trusts (REITs) will spike in difficulty. REITs love these giant firms because they 1) pay “yuge” rental fees and 2) attract other businesses. Losing these whales would intractably stress REITs, and later, the retail stocks of smaller companies.
Although consumer sales volume is up, e-commerce is grabbing a larger share of the pie. That won’t impact sectors such as groceries or home improvement, as these items are purchased on an as-needed basis. However, almost every other discretionary sector, especially including specialty products, is at risk. People no longer want to drive to physical stores when they have the option of shopping online.
Companies without secular demand (ie. groceries) or broad appeal are going to endure a backlash in this new consumer economy. Some names, like Sears, can’t take much more before bankruptcy becomes the only option. Here are four retail stocks that are playing with fire...
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