7 Retail Stocks to Avoid Before the Coming Holiday Sales Plunge

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Normally, the winter season brings people levity as the holidays approach, but the cold economic nature this year brings up the uncomfortable topic of retail inventory for sale. Basically, Federal Reserve Chairman Jerome Powell has stated that it is his top priority inflation control. What’s more, Powell followed through on his statements with the central bank an increase in the reference interest rate.

Going forward, the interest rate increase alone (by 0.75%) is not so important. Instead, it’s all about intentions. Basically, the Fed will do whatever it takes to keep inflation under control. If that means continuously raising interest rates until the target is met, it will happen. Of course, inventory for sale has become a hot topic – and not just for the retail segment.

However, retailing attracts a disproportionate amount of negative attention because people can always cut back on discretionary spending. Therefore, investors will want to be extra careful about the following stocks for sale.

NKE Nike $96.36
ADDYY Adidas $63.64
BURL Burlington $120.71
GPS Gape $8.49
GROWTH Ross stores $84.68
VFC VF Corp $35.99
BBBY Bath & Beyond bed $6.72

Nike (NKE)

Source: mimohe / Shutterstock.com

Iconic American manufacturer of sportswear and equipment, Nike (NYSE:NKE) enjoyed considerable growth after the spring crisis in 2020. However, the stock peaked in November 2021, coincidentally at the same time that the cryptocurrency sector hit a wall. No, neither NKE nor digital assets have much to do with each other. However, Nike, like cryptocurrencies, fell sharply as risk sentiment faded.

Investors don’t have to look far to understand why some are labeling the apparel giant as one of the stocks to sell. On a year-to-date (YTD) basis through September 22, the stock is down 40%. Moreover, the short-term dynamics do not seem to be good for NKE as it has fallen by 11% in the last month.

Financial, business fourth fiscal quarter 2022 earnings report presented some warning signs. Revenue was $12.2 billion, down about 1% from last year’s quarter. This performance may reflect that consumer sentiment for discretionary items (such as sportswear) has peaked.

Adidas (ADDYY)

Adidas shoe box with Adidas logo

Source: 2p2play / Shutterstock.com

Nike’s sworn rival Adidas (OTCMKTS:ADDYY) isn’t doing much better, suggesting investors should consider it one of the stocks to sell. It’s a touchy subject, but all you have to do is look at the charts. Since the beginning of this year, ADDYY has lost 55%. We expect a 15% loss in the last month.

Essentially, Adidas is facing challenges related to the transition from the paradigm associated with the pandemic. As The Washington Post once identified during the initial outbreak of the coronavirus, society caused a pajama moment. Now it’s time to get back to work – the office. Like Luck stated, senior management is currently winning battle to get back into position.

Like Nike, Adidas appears to be suffering from the biggest revenue-related catalysts spurred by the pandemic. In the last company quarterly report, Adidas generated $5.92 billion in revenue for the three months ended June 2022. This was down 3.3% on a year-over-year (YOY) basis.

Burlington (BURL)

photo of Burlington Coat Factory Store

Source: Jonathan Weiss / Shutterstock.com

Burlington (NYSE:BURL), formerly Burlington Coat Factory, is an American national discount department store. Basically, you can imagine that such retailers could do well during inflationary cycles. Those looking for a discount due to falling purchasing power have an incentive to look for cheap solutions.

However, the market, unfortunately, did not receive the notification. BURL shares have slid more than 57% YTD. Worse, the close-up picture leaves no room for counterincentives. In the last month, BURL has lost almost 23% of its market value. This performance is in line with other retail-related stocks to sell.

As with the two sportswear giants above, Burlington may be suffering from top-line revenue. V quarter ended July 2022, the discount clothing retailer generated revenue of $1.99 billion. This figure has decreased by more than 10% compared to the previous year. The US Federal Reserve’s Jerome Powell acknowledged that the focus is on hawkish monetary policy can lead to a rough landingit is better to stay on the sidelines for a company with reduced sales potential.

Gap (GPS)

Stock GPS: Close-up of the Gap logo on a building

Source: Shutterstock

Similar to other stocks in the apparel retail segment, Gape (NYSE:GPS) has no credibility. Basically, the problem is due to a redundancy problem. With so many public and private companies offering high-end fashion, it’s hard to compete. Add in economic challenges as well as whims and you have a tough situation for Gap’s stakeholders.

Here, the market speaks the most. GPS shares have slid nearly 52% since the January open. On a month-over-month basis, GPS is down more than 12%. Unfortunately, it’s not a great look. In addition, the Gap failed Fintellist of the strongest securities. So awkwardly, GPS is bad, but not bad enough to be good – if that makes sense.

Another factor that makes Gap one of the stocks to sell is financial performance. In the quarter that ended in July 2022, the apparel retailer posted revenue of $3.86 billion. This figure is 8.4% lower than the previous year. Unfortunately, the company appears to have run out of gas post-Covid-19, making GPS one of the stocks to sell ahead of the holiday season.

Ross Stores (ROST)

Retail Stocks to Buy Long: Ross Stores (ROST)

Source: Andriy Blokhin / Shutterstock.com

with Ross stores (NASDAQ:GROWTH), I can go either way. It is true that on a YTD basis, ROST has fallen by more than 23% of market value. While I don’t want to get into any stock level stuff, on a comparative basis Ross is better than other stocks to sell.

In addition, the company’s fundamentals present an attractive profile. Many corporate employees may be returning to the office, so they may need to upgrade their wardrobe. But given the economic rumble, these people may prefer to sell products at lower prices.

Still, Ross Stores isn’t exactly a shining star. In the last half-year, which ended in July 2022, the company published income approximately $8.92 billion. In the year-ago cycle, Ross posted sales of $9.32 billion, reflecting a roughly 4 percent decline.

In other words, Ross, like other stocks for sale, appears to have had the highest revenue. Also, net profit fell 22% in the quarter ending July 2022. He’s just not in the best shape before the holidays.

VF Corp (VFC)

A picture of a giant boot on the street surrounded by people.

Source: rblfmr / Shutterstock.com

A global clothing and footwear company, VF Corp (NYSE:VFC) may seem like an abhorrent idea to sell stocks. Mainly because the company represents brands like Jansport and The North Face. Both are aimed at winter sports and, by logical reasoning, wealthier consumers. Winter sports simply require more equipment than, say, kicking a soccer ball.

Of course, VF Corp financially surpasses many other stocks for sale in the wider apparel segment. In the quarter ending June 2022 (actually July 2, to be exact), VF posted revenue of $2.26 billion. This represents an increase of more than 3% compared to the year-ago quarter.

However, the company’s operating income in the last quarter was $63 million. In stark contrast, a year earlier VF posted operating income of $203 million. To me, this is an early sign that perhaps even the wealthy are tightening their wallets.

Bed Bath & Beyond (BBBY)

bed bath and out of store (BBBY)

Source: Shutterstock

Trader of various household products, Bath & Beyond bed (NASDAQ:BBBY) represents a controversial idea among stocks for sale. BBBY previously gained attention as a potential meme trading opportunity. However, this concept collapsed.

It’s hard to know where to start with a struggling retailer. In August, activist investor Ryan Cohen made a lot of headlines when he auctioned BBBY call options. Shortly after the disclosure, however Cohen exited the stockresulting in the market value of the company.

End of August Bed Bath & Beyond filed for a stock sale to raise money. Of course, the measure represents dilution and, unsurprisingly, BBBY cratered again. Soon after, he became the company’s financial director passed away in difficult circumstances.

I might mention that BBBY shares have fallen 53% this year. I can also mention the financial business, which is bad and getting worse. But then at this point I would just be piling on. It’s not a technical term, but BBBY has bad juju all over the place. I wouldn’t buy it, I wouldn’t short it, I’d just stay away.

On the day of publication Josh Enomoto did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are the subject of InvestorPlace.com Publishing Guidelines.

Former Senior Business Analyst for Sony Electronics, Josh Enomoto has helped close major contracts with Fortune Global 500 companies. Over the past few years, he has provided unique, critical insights for the investment markets as well as a variety of other industries including law, construction management and health care.

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