ETFs to Consider as Toys R Us, Sears Close Stores

With Toys R Us and Sears closing stores, it’s clear the retail sector is changing, which means the landscape for consumer ETFs is changing too.

Sears will close a total of 166 Sears and Kmart stores by the end of March – most of these stores will be closed by April. The company closed nearly 400 Sears and Kmart stores last year and will leave the company with fewer than 940 stores in total, down from 3,510 in 2012.

According to Business Insider, investors have applauded Sears’ efforts to close unprofitable stores. But sales have shown no signs of rebounding, down 45% since early 2013.

The company said in a statement, “Sears Holdings continues its strategic assessment of the productivity of our Kmart and Sears store base and will continue to right size our store footprint in number and size. In the process, as previously announced, we will continue to close some unprofitable stores as we transform our business model so that our physical store footprint and our digital capabilities match the needs and preferences of our members.”

Unfortunately, despite efforts to balance their physical and digital stores, sales have continued to decline. And Sears is not the only one. Toys R Us is planning to close or sell all of its Toys R Us and Babies R Us stores, over 800 in the U.S., after 70 years of business.

The company is also facing billions of dollars in debt which has led to a decline in shopping experience over the years.  The company has struggled to pay on loans and lenders urged the company to pursue a complete liquidation of the U.S. business.

Greg Portell, lead partner at retail consultant A.T. Kearney told CNN Money, “If you’re going to have that breadth of inventory, you need someone in the store to help you find it, help you experience it. It’s hard to sell toys in a cold, warehouse environment.”

With the close of such major retailers, stores like Amazon (AMZN) and Walmart (WMT) may become even bigger players than they already are. Given this, we’ve highlighted five consumer ETFs having the largest allocation to Walmart and five consumer ETFs with the largest allocation to Amazon.

ETFs with exposure to Walmart

• iShares Edge MSCI Multifactor Consumer Staples ETF (CNSF) – Walmart Weighting: 9%
• First Trust Nasdaq Retail ETF (FTXD) – Walmart Weighting: 8%
• Fidelity MSCI Consumer Staples Index ETF (FSTA) – Walmart Weighting: 6.3%
• VanEck Vectors Retail ETF (RTH) – Walmart Weighting: 6%
• John Hancock Multifactor Consumer Staples ETF (JMHS) Walmart Weighting: 5.7%

ETFs with exposure to Amazon

• VanEck Vectors Retail ETF (RTH) – Amazon Weighting: 15.13%
• RTH

  VanEck Vct Rtl

  96.23

  -0.18%
• SPDR Consumer Discretionary Select Sector Fund (XLY) – Amazon Weighting: 12.39%
• XLY

  Sel Sct Cns Dis

  105.93

  +0.21%
• First Trust DJ Internet Index Fund (FDN) – Amazon Weighting: 10.04%
• Fidelity MSCI Consumer Discretionary Index ETF (FDIS) – Amazon Weighting: 9.95%
• Vanguard Consumer Discretionary ETF (VCR) – Amazon Weighting 9.90%

For more information on retail products, visit our retail ETFs category.