A woman shops for clothing at the JC Penney Co. store inside the Roosevelt Field Mall in Garden City, New York, U.S. in this file photo.Saul Martinez/Bloomberg
Retail sales may be rising faster than any time this year in government data, but don't tell that to investors in chain-store stocks being eaten alive by Amazon.com Inc.
The bad news won't stop for brick-and-mortar store operators. Following a week of disappointing earnings from J.C. Penney Co. and Macy's Inc., the drumbeat resumed Tuesday as results from Advance Auto Parts Inc., Coach Inc. and Dick's Sporting Goods Inc. sent their shares down at least 14 percent.
As if that wasn't bad enough, today's carnage came as government data showed U.S. retail sales advanced in July by the most this year, with widespread gains from department stores to building-materials outlets.
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At this rate, the group is poised for the worst annual decline in share prices since the financial crisis. It's also signaling a rough conclusion to a once-strong reporting season and casting a shadow on Wal-Mart Stores Inc. and Target Corp., which are due to report later this week.
In a sign of the prevailing bearishness, even Home Depot Inc.'s profit beat was greeted with a 3-per-cent drop in the share price.
"Everybody is being burned in retail and people are just questioning, 'Is there any place that's Amazon-free?'" Gary Bradshaw, a Dallas-based fund manager for Hodges Capital Management Inc., said by phone.
The S&P Supercomposite Specialty Retail Index dropped 2.8 per cent at 12:02 p.m. in New York, on course for the biggest decline since May 2016, as all but three of its 65 members fell. The SPDR S&P Retail ETF fell 2.4 per cent, heading for the lowest close since February 2016. The ETF has lost 10 per cent this year on bad news ranging from a government-proposed tax on import goods to Amazon's expansion into the food industry.
Advance Auto Parts added to the weak results for car-part retailers, reporting quarterly sales and profit that trailed estimates and warning that headwinds will continue into the second half of the year. The stock erased about one fifth of its value, poised for the biggest decline on record. Peers such as O'Reilly Automotive Inc. and AutoZone Inc. also slipped.
Similarly, Dick's Sporting Goods Inc.'s weaker-than-expected sales and earnings sparked a selloff in the likes of Nike Inc. and Foot Locker Inc.
Coach tumbled 14 per cent as the fashion designers gave a weaker annual forecast than analysts had predicted, hurt in part by efforts to burnish the Kate Spade brand by pulling it out of many department stores.
Further collateral damage was felt in the the BI Mall & Shopping Center REIT Index, which slid 2.1 per cent to the lowest in a month.
The indiscriminate selling came as investors had just started to warm to an industry that's home to many of 2017's worst performing stocks. The SPDR S&P Retail ETF saw inflows of fresh money in three of the last four weeks, while short sales on the ETF, or bets on lower prices, have fallen to 49 per cent of its shares outstanding, down from a peak 131 percent reached in June, data compiled by IHS Markit show.
"There will be some winners in retail but boy, it's just a land mine," Mr. Bradshaw said.