Wall Street Discovers the Brick-and-Mortar Meltdown

Wall Street Discovers the Brick-and-Mortar Meltdown by Wolf Richter – Wolf Street

Oh Lordy.

Finally time to make some easy money by betting on the collapse of brick-and-mortar retail, years after it began? Here’s a grisly thought: As of today, there’s an ETF for that.

In its launch announcement today, ProShares explained:

Over 30 major retailers have declared bankruptcy over the past three years, nearly two-thirds of those in 2017, including Toys “R” Us, RadioShack, and Payless. The pressure is expected to continue with some analysts predicting that online sales growth will outpace bricks and mortar retailers 3 to 1 by 2020.

Retail is being profoundly disrupted by shoppers moving online, oversaturated markets and changing consumer behaviors.

The brick-and-mortar retail pain splits two ways: Retailers that have failed to build a vibrant online sales channel and are dependent on their physical stores; and the landlords that lease stores to them.

This EFT focuses on the first, the retailers. The ticker is evocatively named EMTY. As an inverse ETF, it’s supposed to rise in price when the Solactive-ProShares Bricks and Mortar Retail Store Index, which is composed of 56 “traditional” brick-and-mortar retail stocks, declines.

Included in the index are department stores, supermarkets, and retailers of apparel, consumer electronics, and home improvement items. From the top down, with the year-to-date share-price plunge unless otherwise noted:

  • Rite Aid (-82%)
  • C. Penney (-62%)
  • Office Depot (-47% since Aug 7, 2017)
  • Sears (-67% since April 18, 2017)
  • Smart & Final Stores (-47%)
  • Express (-33%)
  • GNC Holding (-43%)
  • Barnes & Nobel (-34% YTD, including the spike today … more in a moment)
  • Chico’s Fas (-46%)

Going back further, it’s even worse. Many of them have lost most of their value since their respective peaks a few years ago. For example, GNC is down 90% since November 2013.

Wal-Mart Stores and Target have only a tiny presence in the index, and Amazon is absent. So the top names on the list are truly among the weakest still-standing publicly traded retailers. But they’re in much better shape than the PE-owned retailers many of which have already toppled into bankruptcy.

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Wolf Richter

In his cynical, tongue-in-cheek manner, he muses on WOLF STREET about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China. WOLF STREET is the successor to his first platform… TP-Title-7-small-200px …whose ghastly name he finally abandoned in July 2014. Here’s the story on that. Wolf lives in San Francisco. He has over twenty years of C-level operations experience, including turnarounds and a VC-funded startup. He earned his BA and MBA in Texas and his MA in Oklahoma, worked in both states for years, including a decade as General Manager and COO of a large Ford dealership and its subsidiaries. But one day, he quit and went to France for seven weeks to open himself up to new possibilities, which degenerated into a life-altering three-year journey across 100 countries on all continents, much of it overland. And it almost swallowed him up.