Retailers prepare for the last Sprint of holiday shopping as warning signs light up around 2019.
Data from Adobe Analytics and the National Retail Federation signal a strong expansion in Christmas shopping. However, investors are nervous about risks such as the US-China trade war and the general uncertainty about Washington's trade policy, as well as a slowdown in key overseas markets.
Shares of retailers such as Target, Costco, Kohl's, Nordstrom and Tiffany have this In recent weeks, costs have fallen sharply and Wall Street is questioning its ability to control the late innings of the economic growth cycle.
"Unfortunately, the weakness and volatility of retail stocks was relentless," said Cowen analyst Oliver Chen on Friday in a research report. The retail index of the S & P 500 has fallen more than 20 percent in the last three months.
Healthy consumers and new shopping opportunities
At the moment, Americans are buying everything, from televisions and toys to clothing. Consumer confidence is high and wages are rising.
According to the latest data from the Ministry of Commerce, retail sales increased in November by 4.2 percent over the previous year.
Online growth has continued rapidly. According to Adobe Analytics on Thursday, Americans have spent a record $ 1
Nintendo switches, LG and Samsung TVs, iPads, Fire TV and Roku devices, headphones and LOL According to Adobe, surprise dolls were some of the top sellers.
On the last Saturday before Christmas, Americans are likely to spend $ 26 billion more than they estimated as a retail consulting firm for both Black Friday and the same Saturday of last year.
"Consumer spending remains solid and clearly proves that the economy is healthy on its way to 2019," said Jack Kleinhenz, chief economist of the national retail association, last week. The holiday expenditures of the NRF projects will increase by up to 4.8 percent compared to the previous year.
A timely decline in gas prices will increase spending on Saturday. Gas prices have dropped 54 cents per gallon since peaking in October. National gas price averages $ 2.33 per gallon, according to AAA. In two states, Missouri and South Carolina, the price of a gallon has fallen below $ 2.
"Saving a few dollars on the pump each time can make a real difference," said Craig Johnson, President of Customer Growth Partners.
Dollar General and Dollar Tree are ready to take advantage of customers' additional cash amounts. According to a recent report by market research firm NPD Group, more than four in ten consumers plan to shop in a dollar store.
Retailers are also following customers in new ways.
Walmart and Target are investing in tools to accelerate production lines in stores and introduce online pick-up in thousands of stores. Amazon offers for the first time a free shipping on all orders. This is a sign that stationary businesses are increasingly putting pressure.
"Retail is a business where the bar is raised and there are more and more differences" The winners and losers, "said Best Buy boss Hubert Joly in an interview with CNN Business Other competitors also benefited from the collapse of Sears and bankruptcy of Toys R Us.
Retailers that offer the simplest shopping experiences in stores will be the winners this year, said Taylor Schreiner, director of Adobe Digital Insights. Old Navy has partnered with Lyft to provide customers with free online pickup stores on Saturday.
Changes to tax rules due to 2017's tax cuts could start early next year
UBS analysts estimate this tax Refund checks will be up to 25 percent higher than a year ago increased retail sales to 6 percent from February to April, lifting Dollar General, Walmart, Ross Stores and Foot Locker.
Despite the favorable terrain today, the background for the retail trade has shifted.  Jay Powell, chairman of the US Federal Reserve, said on Wednesday that the Fed had "seen developments that could point to a slowdown".
In China, cracks have formed, where the trade war with the United States has damaged the country's economy. The dollar has strengthened against the yuan in recent months and has made US products more expensive for Chinese consumers.
This week, online fashion retailer Asos fell 40 percent in the UK after warning that weak sales would weigh on its profits. Asos was considered one of the few highlights in the UK, where many retailers had difficulty dealing with the Brexit uncertainty.
Consumer confidence in the UK has dropped to a five-year low.
FedEx made the market buzz Wednesday, as international business, especially in Europe, was said to have slowed significantly in the past three months.
Warnings about international challenges are not the only factor pulling retail stocks down Target can maintain its strong traffic and sales performance next year.
"Investors are wondering if this is" as good as it is, "said Chen of Cowen.
Retailer Revenues May Increase but Profit Margins Investments in branch offices, digital infrastructure, wages and transportation costs for employees are lower. Target offers free shipping on all orders during the holidays, which could impact the profit.
Costco's shares have fallen 13 percent in the last five days after squeezing tough food industry competition. Target has dropped nearly 30 percent in the last three months to return its profits this year, while TJX – the parent company of TJ Maxx, Marshalls and HomeGoods – is down 22 percent.
Fares are another problem.
In September, the Trump government announced 10 percent tariffs on imports worth $ 200 billion. These tariffs should rise to 25 percent on January 1, but the United States and China have agreed on a temporary ceasefire.
Nevertheless, investors worry about higher tariffs for clothing, sneakers, home textiles and consumer electronics. 19659004] Tarrifs have disrupted retailers' supply chains, and companies have come to introduce products from China before the tariff bite.
If the trade war with China escalates, retailers may be forced to raise prices. Some, such as Walmart and Amazon, will be able to negotiate better as they can push suppliers to lower prices.
Rising interest rates could also slow down consumers who have to pay more for their mortgages and auto loans.
Michelle Grant, Head of Retail at Euromonitor International, said that tariffs and higher interest rates pose a greater threat to consumers than a shaky stock market.
"Although the stock market is in turmoil, nothing has changed in the real economy yet," she said. "Stock ownership is not widespread in the US."