For Wall Street, things are bad enough that retail might just start looking good again.
Historically, retail has been tagged as an “early cycle” sector on Wall Street — the idea being that merchants are so close to consumers that they are among the first to bounce back after a tough stretch. On the flip side, retail stocks are among the first to take a hit.
In an analysis, Boruchow noted the companies he covers — including Capri Holdings Ltd., Lululemon Athletica Inc., the TJX Cos. Inc., Levi Strauss & Co., Nike Inc., PVH Corp., Ralph Lauren Corp. and others — have collectively underperformed the market over the past two years. “This suggests that the multiple pain on the group has largely been felt, and further stock underperformance to come is more so likely on the revisions front,” said Boruchow, pinning future share declines on changes outlooks from the companies.
That doesn’t mean that the good times are absolutely coming to retail now — there’s still plenty of negativity in retail, especially with the debt ceilingfor 43 million people. But the stock setup could be getting better or, at least, shares might have fallen as much as they will.
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