Holidays are ‘bah, humbug’ for retail stocks

NEW YORK -- Retail stocks have been hot this year. The sector is up around 40%. With the holiday shopping season getting ready to rev up, a period in which retailers ring up roughly 40% of their annual sales, you'd think a continuation of the retail rally seems all but assured. Not quite.

Retail stocks tend to fare worse than the broader U.S. stock market in the period from Thanksgiving to Christmas, according to data compiled by Bespoke Investment Group.

Just because retailers' cash registers are screaming ka-ching during the holiday-selling season, the shares of retailers tend to "run out of steam" and "peak" at or shortly after Thanksgiving, according to Bespoke.

STOCK INDEXES: Maintain milestone trifecta

AFTER THANKSGIVING: Stock appetite rises

Since 2000, the benchmark Standard & Poor's 500 stock index has posted average gains of 1.7% from Thanksgiving through Christmas, with positive returns 77% of the time, Bespoke says. In contrast, the index's "retail group" has averaged gains of just 0.8%, with positive returns only 54% of the time. Retail stocks are hot from late summer through Thanksgiving, history shows.

"With the holiday season approaching, the retail group is entering the time of year that is best for their businesses, so the next few weeks should only build on that outperformance, right?" the Bespoke report asks rhetorically.

"Not really. Contrary to conventional wisdom, although retailers derive an outsized share of their annual sales over the next month, their stocks have typically underperformed."

The only bright spot: Internet-related retail stocks, which have averaged gains of 3.9% with gains 77% of the time. "It's yet another manifestation of the 'bricks to clicks' trade," says Bespoke.

Follow Adam Shell on Twitter: @adamshell.