Shares of Hudson’s Bay Co. (TSX:HBC) were down 4.58% in mid-afternoon trading on October 27. Designer and retailer Aritzia Inc. (TSX:ATZ) were down 1.83% and Roots Corp. (TSX:ROOT) managed to fight its way into positive territory for the first trading day since its initial public offering on October 25 – up 0.94%.
The collapse of Sears Canada has experts and analysts sounding the alarm for clothing retail heading into the holiday season. Liquidation sales could severely hinder the holiday season performance of competitors. Thus far its sale prices have not been overly impressive to customers but as it comes closer to shutting its doors permanently prices are expected to drop precipitously.
The meteoric rise of e-commerce is also cause for concern. Although this may comfort companies with strong e-commerce business like Aritzia and Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS), it bodes ill for retailers with large brick-and-mortar footprints.
An activist shareholder at Hudson’s Bay has pressured the company to monetize its real estate holdings as its retail business continues to face major challenges. CEO Gerald Storch will step down on November 1 and the company has already moved to make a $1 billion sale of one of its key buildings.
Roots, meanwhile, is coming off a disappointing initial public offering. It also has a significant brick-and-mortar footprint with 120 stores in North America and 65 in Asia.
Investors should look to add retailers with strong e-commerce growth as we head into the holiday season.
