Investors’ confidence in the retail industry is evidenced by the SPDR S&P Retail ETF’s (XRT) 137.8% returns over the past year versus the SPDR S&P 500 Trust ETF’s (SPY) 39.9% gains over this period.
Furthermore, retailers offering personalized customer experiences should continue to experience accelerated growth in their businesses. Although the economy’s reopening and strategic changes in business models have been helping some retailers gain considerable traction, stocks such as The Gap, Inc. (GPS) and Abercrombie & Fitch Co. (ANF) are trading at lofty valuations despite possessing weak fundamentals. As such, Wall Street analysts are bearish about their growth prospects. So, we think they are best avoided now.
