jeudi 13 avril 2017

Brick and mortar stores over the last 5 years

We hear a lot about Amazon and the way the new economy will work. Will these brick and mortar stores vanish? Nothing like a look at a chart to see how things are going.

Here's a list of some famous canadian and american retail stocks (I've retained only stocks selling clothes, furnitures, hardware, luxury and cheap stuff) and their performance over the last 5 years.

Amazon:  376%

Dollarama: 351%
Home Depot: 188%
Lowe's: 158%
Canadian Tire: 138%
Foot Locker: 137%
Best Buy: 119%
Ross Stores: 116%
Costco: 97%
TJX: 94%
Five Below: 70%
Dollar Tree: 61%
Dollar General: 49%
Leon's furniture: 41%
Walmart: 23%
Big Lots: 5%
Target: -7%
Gap: -9%
Michael Kors: -13%
Macy's: -27%
BMTC Group: -34%
Staples: -39%
Bed Bath and Beyond: -44%
Reitmans: -63%
Sears Holdings: -69%
Le Château: -87%

TSX/S&P: 30%

In retrospect, about half of these stocks did better than the TSX and the other half did worse. It wasn't planned. I just wrote the name of some random stocks that looked great or bad to me and my 25 selections ended up that way. So, buying a brick and mortar stock and keeping it over the last 5 years wasn't that bad.

As we can see, cheap stuff, hardware, shoes and cheap clothes have been the best investment. They'll probably keep on doing OK for a while. The question is: will this while be short or long? I won't be more precise because I can't be wrong with such an abstract sentence.

On the other hand, standard retail stores selling standard things (standard clothes, standard soap, standard furniture) did bad or pretty bad. People don't want to buy their clothes for 40$. They'd rather buy them on Amazon or Aliexpress for 5$ even if they're made of cheap coton that will last 3 months before we can see the sun passing through.

For the moment, it's still OK to invest in retail stores. But probably not a too large chunk of your portfolio.

Instead, buy the stocks that produce things that these stores are selling... and that Amazon is selling.

10 commentaires:

  1. If we take the dollar stores, the steep discount stores and the big hardware stores out of the list of retailers then everything else starts to look very bad.
    You end with wise advice:

    buy the stocks that produce things that these stores are selling... and that Amazon is selling.
    another approach: stick with the retailers who sell stuff too inexpensively for amazon to compete or keep banking on hardware giants Home Depot and Lowe's to make you richer than god over the long run. These two big hardware companies have SICK r.o.e. and amazing return on investment for many years now.

  2. To be honest I’m not very fond of investing in the retail sector. The competition just seems too cut-throat, however having said that I remember walking into a Dollarama store after I lost my job in 2010. I was very impressed with it but my head was elsewhere. It never occurred to me to consider it as an investment…the one that got away.

  3. Interesting to note, some that have underperformed over that time frame have very muched improved their fundamentals (balance sheet, same store sales numbers, etc.). It makes me wonder if buying something like Reitmans could prove to be an excellent contrarian play. It looks to be worth about $10/share right now and trades around $5.50. I'm now thinking of putting in a limited order of around $5 to see if it could be filled in the next few weeks.

  4. 'The dominoes are starting to fall': Retailers are going bankrupt at a staggering rate. Yahoo finance story. hope the link works. here's the link to the story:

  5. Has anyone looked into Tractor Supply Co TSCO, excellent ROE and ROIC (30% and 30%), historical revenue growth and earning growth 10%, forward PE of 18. turtle creek guys own it.

    1. I just screened that one, in the last few days! Interesting, but I'm not sure if I have a real interest.

  6. Turtle Creek Asset Management is one organization I pay attention too. I've included a link to a pdf file of an interview with one of their co-founders. Interesting stuff.

  7. After this nice blog post about Retailers, it would be nice to have a blog or discussion on the Canadian company that is changing the commercial landscape in Canada and around the world: SHOPIFY
    It's not making money, it may turn a profit next year (and go for about 600x earnings). But this company is a game changer and they have insane revenue growth year over year. You see it make new 52 week highs over and over, you hear the buyout rumours and you wonder if you should make an exception for Shopify. Is this like a chance to buy Amazon very early on?

    1. I don't know much about it nor do I follow it. It's really not part of the investing neighborhood I hang out in, so I can't really comment on it. I'm not saying it couldn't be a good investment, its just that I don't know much about it.

  8. Canada's Shopify launches new wireless card reader