U.S. retail sales declined 16.4% sequentially in April, missing market expectations of a 12% decline. The April figure marked the highest decline ever. This gives a clear sign of the severity of the coronavirus pandemic and the impact of lockdowns.
Consumer spending makes up about 70% of U.S. economic activity. Thus, any contraction in it will likely worsen the economic growth picture. Below we highlight a few areas and the related ETFs that were the most and least hurt.
Industries That Were the Least-Hurt
Online Stores
Non-store retail trade in April jumped 8.4% sequentially and 21.6% year over year. Non-requirement of physical presence amid growing fears of virus contamination has been aiding the space (read: Is Coronavirus a Boon for Online Retail ETFs?).
ProShares Long Online/Short Stores ETF (CLIX)
The underlying index consists of long positions in online retailers included in the ProShares Online Retail Index and short positions in the bricks and mortar retailers included in the Solactive-ProShares Bricks and Mortar Retail Store Index.
Groceries & Healthcare Essentials
Grocery and Health & personal care stores saw a smaller decline of 13.2% and 15.2% sequentially, respectively. Panic buying at the start of the lockdown boosted the sales in March and weighed on April buying.
Amid the ongoing virus scare, soap and clean materials companies like Procter & Gamble Company (NYSE:PG) , Clorox Company (NYSE:CLX) and Colgate-Palmolive Company (NYSE:CL) did well. Staples companies like Costco Wholesale Corporation (NASDAQ:COST) and Walmart Inc. (NYSE:WMT) also stayed afloat as consumers’ need for daily essentials went in their favor.
Consumer Staples Select Sector SPDR ETF (NYSE:XLP) XLP is likely to remain steady amid the market turmoil for the same reason.
Major Losers
Clothing
Many mall-based clothing stores were closed amid lockdowns. Also, increased layoffs and cash crisis will likely weigh on the space in the coming days. Apparel sales fell 78.8% sequentially and 89.3% year over year. in April.
SPDR S&P Retail (NYSE:XRT) ETF XRT
The underlying S&P (NYSE:SPY) Retail Select Industry Index represents the retail sub-industry portion of the S&P TMI. Apparel Retail takes about 14% of the fund. The fund may face little pain ahead as much of the focus of XRT shifted toward online stores lately.
Furniture and Electronics
Furniture and electronics sales plunged 58.7% and 60.6% sequentially, respectively and 66.5% and 64.8% year over year in April. Home furnishing company Home Depot (NYSE:HD) have considerable exposure to Consumer Discretionary Select Sector SPDR Fund (XLY) and VanEck Vectors Retail ETF (RTH).
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Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
SPDR SP Retail ETF (XRT): ETF Research Reports
VanEck Vectors Retail ETF (RTH): ETF Research Reports
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
ProShares Long OnlineShort Stores ETF (CLIX): ETF Research Reports
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