Retail ETFs Strengthen on BJ's Earnings, Slowly Returning Shoppers

Retail sector exchange traded funds have been strengthening on better-than-expected quarterly results and a reopening economy that has helped retailers see foot traffic trickling in.

The SPDR S&P Retail ETF (XRT) gained 2.0% on Thursday.

Lifting the retail segment, BJ’s Wholesale Club (NYSE: BJ) surged close to 22% Thursday after reporting record first-quarter earnings for 2020 with comparable-store sales growth of 20% as the COVID-19 pandemic motivated shoppers to pack their pantries, The Motley Fool reports.

Additionally, retail-chain operator L Brands (NYSE: LB) jumped 18% on Thursday after reporting a wider-than-expected first-quarter loss and said it will follow through on spinning off its troubled Victoria’s Secret chain into a stand-alone entity.

The retail sector also enjoyed strong earnings results on Wednesday from the likes of Lowe’s and Target as well as they have helped supply the omnichannel needs of consumers and are positioned to offer good value in a changing market environment.

The consumer sector is also pushing higher as the broad economy begins to stir again. Data from cellphone location firms Unacast and SafeGraph through last weekend both revealed a slow rise in visits to retail stores, Reuters reports.

Additionally, data of around 55,000 small businesses from time management firm Homebase also indicated that more firms are reopening and more workers are back on the job.

“Do not write off brick and mortar retail just yet,” Professor Anthony Michael Sabino, Esq. of the Tobin College of Business at St. John’s University said in a note. “While stores are empty now, and some consumers have detoured to online sellers, it would be a mistake to ignore the pent-up consumer demand that is boiling beneath the surface.”

However, the response may be slow going as in some cases, businesses are allowed to open but with limited capacity or other regulations to keep the coronavirus from popping up in another hot spot.

For more information on the retail sector, visit our retail category.