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June's Food Fight: To Whom Go the Spoils?

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June's Food Fight: To Whom Go the Spoils? PART 1 OF 5

Picking up the Crumbs: Food Retail Stocks after June

One of the worst months in 2017

Food retail stocks had a terrible June, with most major grocers closing the month deep in the red. From traditional supermarkets to big-box retailers and discount stores—nearly everyone recorded a steep fall.

The seven companies in the S&P 500 Food and Staples Retail Index—Kroger (KR), Wal-Mart Stores (WMT), Sysco (SYY), Walgreens Boots Alliance (WBA), Costco Wholesale (COST), Whole Foods Market (WFM), and CVS Health (CVS)—shed more than 6% during the month.

Picking up the Crumbs: Food Retail Stocks after June

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Whole Foods was best-performing stock in the bunch, gaining 20% in June—thanks to the Amazon acquisition. But while the deal boosted Whole Foods’ stock price, it eroded billions of dollars from the market caps of major retailers around the country.

Kroger was the among the biggest losers, plunging more than 20% in June. The company’s weak guidance and the Amazon-Whole Foods deal drove down its stock price.

The Consumer Staples Select Sector SPDR Fund (XLP), which invests 22% of its holdings in the food and staples retailers, fell ~3% in June.

A quick look at the US food retail sector

The US Food retail sector consists of store formats that range from small grocery shops and convenience stores to large supermarkets, club stores, discount stores, and drug stores. The supermarket format represents the largest segment of the US food retail industry.

Walmart is America’s largest food retailer, while Kroger is the largest supermarket and the second-largest food retailer in the US. According to GlobalData Retail, Walmart had a 14.5% share of the US food and grocery market in 2016, while Kroger had a ~7% share.

Continue reading this series (below) for more on what happened in the food retail sector—specifically among major supermarkets—in June.

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