Traditional retailers are dying, they say. The days of brick-and-mortar stores are numbered as consumers flock to cost-cutting online merchants. Things have gotten so dreary in the retail world that an exchange-traded fund launched last month -- ProShares Decline of the Retail Store ETF (NYSEMKT: EMTY) -- designed specifically to rise as mall chain stocks tumble.
ProShares Decline of the Retail Store ETF even has a catchy ticker symbol, going with EMTY, as in the "empty" malls that it hopes to cash in on for its investors. In a case of impeccable timing, it launched a week before the start of the holiday shopping season. Things clearly look dreary for many conventional merchants, but the narrative isn't guaranteed. ProShares Decline of the Retail Store ETF has actually fallen since its debut last month. There are also a few retailers moving higher. Best Buy (NYSE: BBY), Five Below (NASDAQ: FIVE), and Gap (NYSE: GPS) all hit fresh 52-week highs last week. Let's see why they are bucking the trend.
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Consumer electronics was one of the earliest victims of the e-commerce revolution. The original e-tail leaders were companies selling media items like movies, music, and software cheaper than local merchants, and when Circuit City boarded up, it seemed as if it was just a matter of time before Best Buy would follow suit. Things obviously didn't pan out that way.
Turnaround guru Hubert Joly has worked wonders since arriving at Best Buy five years ago, and now that the chain has proven that it's not going away anytime soon, it's starting to dream bigger. Best Buy 2020 is the vision that was recently laid out, carving a path for the next few years where a broader array of services and more cost savings will take the chain even higher.
Shoppers dig bargains, and Five Below has made it cool for young consumers to think thrifty. The trendy discounter offers a wide array of merchandise that costs $5 or less.
Five Below is expanding quickly, and that's the biggest reason for the 29% surge in net sales in its latest quarter. Five Below's store count is 21% larger now than it was a year earlier. However, comps did rise an impressive 8.5% in its fiscal third quarter. Some doubters figured that the popularity of fidget spinners a year ago were fueling the spike in sales, but Five Below has proven that its success is about more than any one particular low-ticket fad item.
Gap investors have suffered through feast and famine with Gap, the company behind Old Navy, Banana Republic, and its namesake stores. We're now living in the bountiful cycle. The chain has posted four consecutive quarters of positive comps, including a 3% uptick in its latest financial period.
Gap boosted its revenue, earnings, and comps guidance last time out, an encouraging sign for the the stock's momentum as we hit the home stretch of this critical holiday shopping season. Gap won't always be on top, but it's hard to fight against it when the retail giant is on a roll.
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