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3 Factors Driving Retail Stocks' Decline

Too many stores, e-commerce, and a shift in demand have been weighing on the sector, says Morningstar's Bridget Weishaar.

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Bridget Weishaar: We see three factors driving performance for retail stocks. 

First is mall exposure. We believe the U.S. is very overstored with almost 24 square feet of retail space per person. That compares to 16 in Canada and 11 in Australia. This means the U.S. has more than double every other country except Canada. We think companies are only in the early stages of rightsizing the store base and fear that companies with large store bases could see shrinking square footage over the next several years. 

Bridget Weishaar does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.