The Surge in Online Sales Continues
October 05, 2020
Read Time 2 MIN
2020 is shaping up to be an unprecedented year. Coronavirus induced lockdowns and social unrest has resulted in a wave of bankruptcies, with Yelp revealing that about 60% of closed businesses will never reopen their doors again.1 Amidst the gloom, well-capitalized big box retailers have been making great strides towards expanding their online presence, which has helped send their share prices to all-time highs.
Notable examples include:
- Amazon: Its reported Q2 profit of $5.2B, or $10.30/share, is nearly double from $5.22/share a year ago.2 The company reported sales of $88.9B, up 40% from $63.4B a year prior and well ahead of expectations. Shares of the retail giant are now up more than 63.4% YTD as of 9/24/2020.3
- Target: Its Q2 earnings per share (EPS) of $3.38 significantly outpaced the market’s expectations of $1.65.4 Its revenue grew almost 25% YoY to $23B and beat the average estimate by almost $3B, while its digital sales soared 195%. The company’s share price is now up around 20.5% YTD as of 9/24/2020.5
- Walmart: The company crushed its Q2 earnings expectations, posting earnings of $6.48B, or $2.27 EPS, up from $1.26 a year earlier.6 While same-store sales jumped 9.3%, fueled by demand for food and general goods, e-commerce sales rocketed 97% in the period. Walmart is now up 16.5% YTD as of 9/24/2020.7
- Lululemon: Despite the popular athletic retailer posting a sales decline of 51%, digital sales rose an astounding 155% and now account for over 60% of total sales.8 This is a key development in the physical retail landscape left in disarray because of COVID-19. Its share price is now up 36.2% YTD as of 9/24/2020.9
We believe large, well-capitalized companies like these may present an attractive opportunity for investors, particularly given their potential to grow market share, especially with the holiday season and gradual reopenings right around the corner. The VanEck® Retail ETF (RTH®) offers exposure to companies involved in retail, including distribution, wholesalers, online retailers and retailers of food and other staples.
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IMPORTANT DISCLOSURES
1 Source: Yelp Local Economic Impact Report, September 2020.
2 Source: Market Watch: Amazon promised to spend its profit amid pandemic, but ended up with record earnings anyway, August 1, 2020.
3 Source: Morningstar, September 24, 2020.
4 Source: Nasdaq: Why Target Stock Is Still a Buy After Its Post - Earnings Rally, September 1, 2020.
5 Source: Morningstar, September 24, 2020.
6 Source: Barron’s: Walmart Crushed Earnings Expectations. Why Its Stock Is Falling. August 18, 2020.
7 Source: Morningstar, September 24, 2020.
8 Source: The Motley Fool: After 20% Drop, Lululemon Athletica to Start Buying Back Its Stock Again, September 23, 2020.
9 Source: Morningstar, September 24, 2020.
This content is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this content. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.
The information herein represents the opinion of the author(s), but not necessarily those of VanEck, and these opinions may change at any time and from time to time. Non-VanEck proprietary information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Historical performance is not indicative of future results. Current data may differ from data quoted.
An investment in the VanEck® Retail ETF (RTH®) may be subject to risks which include, among others, investing in retail companies, equity securities, consumer discretionary, consumer staples sector, depositary receipts, issuer-specific changes, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and concentration risks, all of which may adversely affect the Fund.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus for VanEck Funds and VanEck ETFs, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read it carefully before investing.
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IMPORTANT DISCLOSURES
1 Source: Yelp Local Economic Impact Report, September 2020.
2 Source: Market Watch: Amazon promised to spend its profit amid pandemic, but ended up with record earnings anyway, August 1, 2020.
3 Source: Morningstar, September 24, 2020.
4 Source: Nasdaq: Why Target Stock Is Still a Buy After Its Post - Earnings Rally, September 1, 2020.
5 Source: Morningstar, September 24, 2020.
6 Source: Barron’s: Walmart Crushed Earnings Expectations. Why Its Stock Is Falling. August 18, 2020.
7 Source: Morningstar, September 24, 2020.
8 Source: The Motley Fool: After 20% Drop, Lululemon Athletica to Start Buying Back Its Stock Again, September 23, 2020.
9 Source: Morningstar, September 24, 2020.
This content is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this content. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.
The information herein represents the opinion of the author(s), but not necessarily those of VanEck, and these opinions may change at any time and from time to time. Non-VanEck proprietary information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Historical performance is not indicative of future results. Current data may differ from data quoted.
An investment in the VanEck® Retail ETF (RTH®) may be subject to risks which include, among others, investing in retail companies, equity securities, consumer discretionary, consumer staples sector, depositary receipts, issuer-specific changes, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and concentration risks, all of which may adversely affect the Fund.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus for VanEck Funds and VanEck ETFs, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read it carefully before investing.