What Are the Current Trends in Retail Markets?

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It’s no secret that market volatility has generated an impact on segments that would appear to be unrelated to the primary stimulants generating the anxious moments for traders and investors’ portfolios. These include such uncomfortable conditions as the global economy including specifics such as China’s struggling finances that have slowed consumer spending and led to Chinese officials’ efforts to stabilize their currency against world markets.

Oil prices that have been trading at less than 50% of their value only months ago have been a consumer’s best friend (assuming you’re not heavily invested in petroleum stocks) due to the benefits received each time your vehicle’s gas tank is filled. Low fuel prices result in more money to utilize for discretionary spending. This would imply that retailers would reap the benefit of more money in the pockets of consumers. Some retail markets are not enjoying that experience. In fact in some cases quite the opposite is true.

Some Retail Markets – and Retail Stocks – are Struggling

Some major retailers have been undertaking efforts to focus on key brands to streamline operations and trim less relevant products from their portfolios.

Consumer giant Proctor and Gamble is an example of this strategy which could be viewed by investors as a positive sign toward becoming leaner and even more profitable over time. Most recently P&G announced this week that they were selling off several international brands of shampoo products to German competitor Henkel. Financial terms were not disclosed as part of the announcement. Some of P&G’s top selling products in markets that include Russia, Turkey, and Saudi Arabia: Pert, Blendax, and Shamtu, were transitioned to Henkel under the terms of the sale. P&G has indicated to the public that they are not yet finished with the shedding of products stating their expectations of further sales of well-known products such as Cover Girl makeup products and Clairol hair color lines. Whether you view this effort as positive or negative will help you determine whether you chose to trade in P&G or even add the buyers of these products to your potential trade strategy.

Performance results against expectations or actual financial results – which is more important to you? Such considerations come into play when considering activity in such companies as book seller Barnes & Noble. With all the digital access to news and pleasure reading available to consumers today with tablets, WiFi, eBooks, and digital downloads to reading devices such as Kindles, it’s not surprising to expect a reduced demand for printed books, magazines, and other texts. Barnes & Noble experienced a drop in revenue of nearly 28% in their most recent reporting, although they attributed a large part of this to a spin-off of a large portion of their business last year.  Although their profit per share came in 2% lower than analysts had expected, shares responded with an increase of 6% and although their revenue may be lower than last year in the same period it still exceeded expectations by .3%. Investing in Barnes & Noble would depend on your view for their potential longevity and how you measure their financial success.

Kroger, the largest supermarket chain in the US experienced the largest single-day drop in share price this week, citing lower sales in the final quarter of 2015. Kroger officials further predicted that 2016 will likewise experience a continuation of slowing sales. At one point the drop was greater than 9% with a final close revealing a drop of 7% under heavy trading. Nearly 39 million shares were traded – more than four times the average daily activity. Kroger investors have not been accustomed to such volatility, with the company’s success in such a competitive market for over a decade. They continue to build market share through their practice of acquisitions now operating 2,778 markets in 35 states plus the District of Columbia under two dozen brand names. Kroger’s long-term viability is what investors will consider for the long term, but traders may also participate in current lower prices to benefit from what could include a prompt recovery.

Leveraging Day Trades in Retail Markets

Monitoring such retail announcements such as selloffs, acquisitions and performance can provide traders with the information needed to make quick profits or to avoid losses. Volatility can in reality be a trader’s opportunity to benefit from buying low and trading quickly as share values move in response to market activity.

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