One question on Wall Street's mind these days is the strength of
the consumer and what effect it will have on the retail sector in
2013. The SPDR S&P Retail ETF (NYSE:
) had a solid 2012, up 19 percent, compared to a 13 percent gain
for the S&P 500, but questions are out there about whether the
fund will be able to outperform again in 2013.
After a strong start to the holiday shopping season, the year
ended with a whimper. MasterCard Advisors Spending Pulse recently
said that holiday-related sales rose 0.7 percent from October 28
through December 24, below expectations of three to four percent
growth. And Tuesday, data from a Channel Advisors showed a slowdown
in spending at Amazon.com's (Nasdaq:
) and eBay's (Nasdaq:
) online marketplaces.
Sales at Amazon.com rose 29.8 percent in December, down from
November's rate of 43.7 percent. Meanwhile, sales at eBay.com rose
22.2 percent in December, down from 27.4 percent growth in
Let's just say that sentiment isn't all that positive in the
retail sector at the moment. Many high flyers with seemingly strong
fundamentals are facing selling pressure as investors question
growth prospects ahead.
After a massive price since March 2009, Ulta Beauty's (Nasdaq:
) technical picture is starting to weaken. Late last week, the
company said total sales in the seven-week holiday period from just
before Thanksgiving to the end of the year rose 23 percent from a
year ago to $475.6 million. Solid growth, definitely, but
same-store sales rose 7.4 percent, down from 12.6 percent in the
holiday season of 2011.
Shares of yoga apparel retailer Lululemon Athletica (Nasdaq:
) have also been under distribution in recent weeks. The stock is
down 6.4 percent over the past five trading sessions.
Earnings season hasn't ramped up in earnest yet, but after the
close today, it will be interesting to hear what PriceSmart
) has to say. It's basically known as the Costco of Latin America
and the Caribbean. On the surface, fundamentals are solid, but
PriceSmart has been facing institutional selling pressure for
several weeks now.
A look at its weekly chart below show four higher-volume weekly
declines since early November and another taking shape this week.
This is what distribution, or professional selling, in a stock
The Thomson Reuters consensus estimate calls for profit of $0.62
a share, up 32 percent from a year ago. Sales are seen rising 12
percent to $535.4 million.
Just because sellers have been in PriceSmart ahead of earnings,
doesn't mean it's bound to head lower. Still, buying demand appears
to be drying up. Short interest is pretty high in PriceSmart so a
short squeeze is possible if numbers come in better than expected.
As of December 14, short interest was 1.9 million shares. It's
leveled off in recent months, but keep in mind that PriceSmart only
trades about 150,000 shares a day.
The bottom line is that PriceSmart looks vulnerable ahead of
earnings, especially after a 1,500 percent+ price move since the
start of the bull in March 2009. It's a classic late-stage base,
meaning a good argument can be made that the big money's already
been made. Smart money isn't right all the time, but I suspect it
could be in this case.
I'll be taking part in a stock market roundtable at Benzinga
Thrusday, January 10 with Brian Sozzi, Bob Lang and others. It's a
free webinar. Sign up
Stock chart: (c) 2013 Benzinga.com. Benzinga does not provide
investment advice. All rights reserved.
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