Future of Retail: Has it Hit the Bottom Yet?

Posted On November 17, 2017 1:24 pm

Much ink has been spilled writing about the death of brick and mortar retailers, mostly at the hands of Amazon.  But this prognosis seems to have been greatly exaggerated, and the future of retail is looking brighter.

It’s certainly true that 2017 has seen a record number of store closings (over 6,000), with outright bankruptcies at 19 and counting…

However, it’s also true that over 85% of consumer purchases are still done offline or at physical locations.

Maybe it was the with expectations that the upcoming Black Friday would be the nail in a few more retailers’ coffins that prompted Proshares to choose this week to launch a pair of Exchange Traded Funds that basically bet on the demise of retailers.

One ETF is called ProShares Decline of the Retail Store (EMTY), and the other Long Online/Short Stores ETF (CLIX), but the timing could not have been less auspicious.

On the day they launched, WalMart blew out earnings, sending shares up 7% to an all-time high. In the process, the company showed it is not only competing with Amazon, but winning on several fronts.

Then on Thursday and Friday, a host of retailers that had been all but left dead, such as Foot Locker, Hibbetts, Abercrombie & Fitch, and Gap showed they are very much alive by reporting better than expected earnings.

This forced the bears and short sellers who had been feasting on supposed rotting carcasses of these companies to eat crow, as the shares of each soared by 10% to 20% on these days.

They say retail investors are the last to join a trend or are the sign of a topping out. In this case, it would seem ProShares betting against the future of retail was the sign of a bottom.

 Related: Use the Iron Condor Strategy for Big Profits in a Steady Market!

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Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.

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