The bad news has been stacking up for brick-and-mortar retailers, with online competition growing, malls struggling, and price promotions around the holidays putting pressure on earnings.
In the latest blow, Moody's recently cut its forecast for the entire department store sector. The credit rating agency now expects profits to decline 20% in 2019 compared with its earlier prediction of 15%, according to industry blog retailtouchpoints.com.
But within the Moody's report came a glimmer of good news for investors looking for retail shares to add to their portfolio. Off-price retailers such as TJMaxx, owned by TJX Companies (NYSE: TJX), and Ross (NASDAQ: ROST) are turning inventory twice as fast as department stores. As traditional retailers suffer, TJX and Ross, which have both reported positive earnings surprises in the past quarter, may have more good earnings news ahead and that could translate into stock market gains.