SPDR S&P Retail (ETF) (AMEX:XRT)

NetscribeETF (37.64) Submitted: 3/23/2007 8:25:42 AM : Start Price: $40.48 XRT Score: -49.28

SPDR Retail ETF represents the retail sub-industry portion of the Standard and Poor Total Market Index. The equally weighted index has some 65 companies across all specializations. With net assets worth approximately $8.4 million it is trading with a price to book ratio of 2.92x with price to earning multiple hovering around 19.5x.
Hypermarkets and super centers Wal-Mart, Costco, Sears and JC Penny are experiencing weak traffic and fewer renewals for their membership clubs. Price sensitive customers who indulge in price comparisons hurt the company’s margins. The outlook for the specialty stores look mixed and depends on the individual prospects of the merchandise they sell ranging from luxury items such as jewelry to less discretionary items such as office supplies.
The strategy of the food retail business has been to differentiate their service and products offerings rather than lowering price. Moreover they are set to benefit from the recently renegotiated labor contracts with consolidation helping in easing out pricing pressures. Companies with strong brands, differentiated products, superior customer service and attractive price value propositions would perform well in the apparel and shoe retail. The demography of the aging population and increased sale of generic drugs make drug retail a bright spot for companies like CVS.
Though the fund has not been able to keep its expense ratio down the overall performance has been satisfactory with average annualized for the past five years at 10.49%. Retailers catering the mid level and lower income consumers will find it difficult due to the soft housing market and rising energy cost. In conclusion lackluster employment growth and signs of recession setting makes the going difficult for the fund and chances of beating the market looks dim.