SPDR® S&P Retail ETF

Retail traffic dipped in July 2015 after increasing in June 2015. The July numbers came in 17% below what was recorded by ShopperTrak in June.

When we compare the S&P 500 (SPX) with the SPDR S&P Retail ETF (XRT), the retail ETF has beaten the broad market index on a trailing one-year basis.

Highly competitive in the beauty and cosmetics market, Estée Lauder’s revenue reached $11 billion in fiscal year 2014. However, the cosmetics company faces stiff competition from L’Oréal, Coty, and Avon (AVP).

Consumer confidence is one of the major factors that affect consumer spending. As a result, the retail sector has had a direct relationship with this metric.

When we talk about retail valuations, it is important not to generalize that all the companies in the SPDR S&P Retail ETF can be valued using the PCF or the PS multiple.

Brick and mortar retail companies have high inventory levels and are very capital-intensive companies that require a significant amount of working capital and capital expenditure.

CVS Health’s Retail Pharmacy segment reported sales of $17.2 billion in 2Q15, an increase of 2.2% over 2Q14. CVS boosted its share of the retail pharmacy market to 21.6% in 1Q15, from 21% in 2Q14.

Nike sales growth was fueled by new store openings, higher store comps, and growth in the e-commerce channel.

US online sales increased to 7.0% in 1Q15 from 4.2% in 1Q10. More consumers are preferring to shop online, which makes online expansion vital for department stores.

What starts as a competitive strategy for Wal-Mart may also affect the general level of grocery price inflation in the United States.

The last three rate hikes have seen negative three-month returns following the initial tightening period. Yet in the subsequent months, the S&P 500 Index rebounded.

In March, Nordstrom announced the opening of its second international location in Canada. Nordstrom plans to open six Canadian stores through 2017.

TJX Companies (TJX) has a very efficient internally developed inventory management system that helps the company ensure the proper flow of merchandise.

For the quarter ending in December 2014, Alibaba achieved 265 million monthly active users on its mobile commerce apps. This is a sequential growth of 22%.

Part of the reason for Alibaba’s GMV growth was the growth in its active user base. The growth was driven by an increase in active buyers throughout China.

Department stores like Macy’s (M) are focusing on improving their inventory management so as to maintain the optimal level of inventory, bring down costs, and avoid stock-outs.

Labor productivity growth has slumped to a negative. The 30-year average is 2%. However, this average has been quite volatile.

The company’s three major brands—The North Face, Vans, and Timberland—all reported double-digit growth rates in the quarter.

Walmart (WMT) has a mix of debt and equity in its capital structure. The retailer’s (XRT) total debt, both short and long-term, is ~$56.6 billion.

Walmart embarked to aggressively minimize the capital cost per square foot of retail space with the aim of faster payback on investment.

In 2013, Walmart closed 29 underperforming stores in China. It also announced a revamp. It planned to open 110 new stores in focused geographies.

Walmart (WMT) is the world’s largest retailer. The company reported 6,189 stores in its International segment—compared to 4,987 in the US in 3Q15.

Cross-docking is an inventory management system. Walmart made it popular. Cross-docking can lower the time required to transport merchandise.

Walmart (WMT) operates retail (XRT) and wholesale stores. The stores are located in the US and 26 other countries around the world.

Nordstrom is an upscale department store that competes with other high-end stores. However, not all of Nordstrom’s target customers are high-end shoppers.

Walmart is among a select group of global retailers (XRT) (RTH) competing in a variety of store formats. However, Walmart dwarfs all of the other companies.

Only two of the top 12 US retailers, Macy’s and Nordstrom, managed to witness a rise in market share over the period 2009–2014.

To address inventory issues associated with online sales at its distribution centers, Best Buy rolled out a ship-from-store strategy.

At Best Buy, returns, replacements, and damages account for nearly 10% of revenues and have cost the company over $400 million in losses each year.

Coach, Inc. (COH) distributes products through wholesale and direct-to-customer channels. It runs wholesale shops-within-shops at major department stores.

Lululemon Athletica announced an increase of 10.4% in its revenues to $419.4 million in the third quarter of fiscal 2015 compared to $379.9 million in 3Q14.

These changes should lower future inventory levels and probably result in higher inventory turnover and lower inventory-to-cash days.

Slow growth in personal consumption expenditure may affect growth. Currently, personal consumer expenditure is $12 trillion. This is ~70% of the GDP.

Consumer confidence is an economic indicator. It measures how confident consumers are about the overall state of the economy. It also measures how confident people feel about their income’s stability. Their confidence impacts their economic decisions—like their spending activity.

During economic uncertainty, investors want steady, guaranteed returns from the Treasury instead of quick returns from price movements in equity ETFs.