What Happened?
A number of stocks jumped in the afternoon session after sentiment in the retail space improved as monthly retail sales rose a healthy 0.9% month-over-month and 6.9% year-over-year per the Census Bureau.
With money fleeing expensive AI names amid the chip selloff and hawkish rate repricing under new Fed Chair Kevin Warsh, large, cheap, cash-generative retailers are a natural shelter. Also, the June 17 retail sales print showed spending was still solid and this is what separates retail from pure-defensive staples.
The fundamentals reinforced it. Walmart held above its 200-day average ($116.55), and Costco's double-digit comps and 92%+ renewal rates show pricing power and loyalty intact. Target was the outlier as its gain was idiosyncratic, driven by Wolfe naming it a Top Pick on a genuine turnaround (its first positive comparable sales in five quarters), not the rotation. The rotation component is fragile and could reverse if AI names stabilize, and the retail sales figure was a six-day-old backdrop rather than the session trigger.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Home Improvement Retailer company Floor And Decor (NYSE: FND) jumped 1.4%. Is now the time to buy Floor And Decor? Access our full analysis report here, it’s free.
- Grocery Store company Kroger (NYSE: KR) jumped 2%. Is now the time to buy Kroger? Access our full analysis report here, it’s free.
Zooming In On Kroger (KR)
Kroger’s shares are not very volatile and have only had 1 move greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock dropped 5.8% on the news that the company reported first-quarter 2026 results that missed Wall Street's profit expectations.
While Kroger's quarterly revenue of $46.12 billion beat analyst forecasts, its GAAP earnings per share of $1.46 came in 8.6% below the consensus estimate. The results also pointed to slowing momentum, as same-store sales growth decelerated to 1% year-on-year, a significant slowdown from the 3.2% growth in the same quarter last year.
Adding to investor concerns, the company's free cash flow margin, a measure of cash profitability, decreased to 1% from 2.4% a year ago. Although the company provided full-year earnings guidance that was slightly ahead of expectations, the bottom-line miss for the quarter and slowing sales growth overshadowed the positives.
Kroger is down 9.4% since the beginning of the year, and at $57.07 per share, it is trading 24.5% below its 52-week high of $75.60 from March 2026. Despite the year-to-date decline, investors who bought $1,000 worth of Kroger’s shares 5 years ago would now be looking at an investment worth $1,456.
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