Copyright (c) 2012 Ted Hurlbut
If you track the daily ups and downs of retail stocks, and the S&P Retail Index, as I do, you'll know that retail stocks have done pleasant well over the past three months. Between March 9th though the market while a whole started turning up, and June 5th, The S&P Retail Index jumped from 228.76 to 334.12, a 46.0% increase, compared to a awake in the S&P 500 Index from, 676.53 to, 942.46, a still strapping 39.3% increase. Retail, as a sector has led the market.
Clearly, the investor community as a whole thinks there's something up. They believe that the achievement of the recession is in sight, and that retailers will lead, rather than follow. This is interesting in light of an article this morning from Reuters that the back-to-school shopping season is likely to indigen pretty difficult.
Some might sense a contradiction, but I don't think there is one. I think retail fortunes will turn before long, but not before back-to-school. It isn't until we get into mid-September, and on into October before the comps turn favorable. That corresponds to when things went off a cliff last year.
Some might infer that that would hardly represent a turnaround, but we are working in a new world, with a new normal. We're putting in a base now, so the upturn in the fall, no matter how modest, will still represent improvement, and have mere as alpha and omega psychologically as it has financially.
Beside the way, the S&P Dispense Index has revealed something else pretty interesting in the last three months. There's been a lot of conversation in the omega several weeks around the question of whether Walmart will be able to consolidate their gains and hold onto the new customers they've picked up in this downturn. At last weeks annularity meeting in Bentonville, the Company insisted that they would. The investor community has a different perspective, however. On days when the S&P Retail Index has bot up, Walmart stock has been down, und so weiter on days when the Index has been down, Walmart assortment has been up. Clearly, investors see Walmart as a counter-cyclical play.
I think they're right. I think as the economy improves Walmart will undergo a hard-nosed time holding onto many of their new customers. Those consumers permit known all forward what Walmart is all about, and weren't responsive when things were better. They are shopping in Walmart today for they think it's necessary, but they'd prefer to be shopping elsewhere. Und So Weiter when the turn comes, I think they will subsist shopping elsewhere.