Retail sales volume fell in July, marks the third consecutive month of decline. Sales volume fell 1.6% from June and 8.1% in the trailing 12 months as consumer confidence fell on record-high inflation.
“This year we are looking at negative discretionary cash flow for the first time since the 2008/09 financial crisis,” said Goldman consumer goods analyst Jason English.
On the other hand, trading companies continue to struggle with supply chain issues. Among the 79 major retailers that reported profits between April 1 and May 23 this year, 59% reported a decrease in consensus revenue estimates for the next year, while 71% saw a decrease in estimates for EBITDA.
With this in mind, investors might be wise to consider fundamentally weak retail stocks Allbirds, Inc. (BIRD) and The Gap, Inc. (Geographic Positioning System).
Allbirds, Inc. (BIRD)
BIRD manufactures and distributes men’s and women’s footwear and apparel products through its retail stores in the United States and internationally, and online.
For the fiscal quarter ended June 2022, BIRD’s gross profit declined 26.1% year over year to $28.19 million. Operating loss increased 603.5% from the year-ago quarter to $29.33 million. Net loss per share rose 42.9% to $0.20 compared to the same period last year.
Consensus EPS estimate of minus$0.09 for the fourth fiscal quarter ended December 2022 indicates a 1.2% decrease year-on-year. Also, the company’s EPS for the fiscal year ending December 2022 is expected to be negative $0.54.
BIRD’s price-to-sales multiple of 1.97 is 125.6% above the industry average of 0.87. In terms of Forward EV/Sales, the stock is trading at 1.30x, 16.8% higher than the industry average of 1.12x.
The stock is down 78.6% over the past nine months to close the last trading session at $4.11.
BIRD POWR ratings agree with these bleak prospects. The stock has an overall rating of F, which equates to a Strong Sell in our proprietary rating system. The POWR ratings are calculated considering 118 different factors, with each factor being optimally weighted.
BIRD has a Value, Stability, and Quality rating of F and a Growth and Mood rating of D. In ’67 stock Fashion & Luxury industry, it is in last place. click here to view the additional POWR ratings for BIRD (Momentum).
The Gap, Inc. (Geographic Positioning System)
GPS is an apparel retail company offering apparel, accessories and personal care products for men, women and children under the Old Navy, Gap, Banana Republic and Athleta brands.
For the fiscal quarter ended July 30, 2022, GPS net sales decreased 8.4% year over year to $3.86 billion. Operating income declined 106.8% from the year-ago quarter to a negative $28 million. The company’s net income and EPS were minus $49 million and minus $0.13, respectively, down 119% and 119.4% from the same period last year.
Road revenue estimate of $3.82 billion for the fiscal quarter ended October 2022 reflects a 3% decrease from a year earlier. Also, the consensus estimate of $15.68 billion in revenue represents a 6% year-over-year decline in the current fiscal year.
In terms of its EV/EBITDA, GPS is currently trading at 15.91x, 83.5% higher than the industry average of 8.67x. Its forward EV/EBIT multiple of 1,438.82 is 11,873.1% above the industry average of 12.02.
The stock is down 65.8% over the past year to close the last trading session at $9.14.
It’s no surprise that GPS has an overall rating of D, which means sell in our POWR rating system. GPS also has a D grade for stability. It is ranked 60th in the same industry.
To view the additional POWR ratings for Quality, Growth, Momentum, Value and Sentiment for GPS, click here.
BIRD shares traded at $3.88 per share on Thursday morning, down $0.23 (-5.60%). Year-to-date, BIRD is down -74.27% versus a -17.07% gain in the benchmark S&P 500 index over the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue investment research as a career. Their fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More…
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