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Retail in 2020: The year’s biggest winners and losers

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Yahoo Finance’s Brian Sozzi joins Adam Shapiro and Seana Smith to discuss the retail space and how the coronavirus has impacted 2020’s biggest winners and losers.

Video Transcript

ADAM SHAPIRO: Welcome back. Brian Sozzi has been tracking this year's retail apocalypse. And, Brian, let's start with-- I hate to say the biggest losers of 2020 because I know who you're going to say, and the company does a lot, but go for it.

BRIAN SOZZI: Well, it's more fun to start on the biggest losers there, Adam. It's just true disaster stories that perfectly encapsulates the "retailpocalypse," which essentially is just doom and gloom spreading throughout retail through a lot of store closures and bankruptcies.

But the biggest loser is absolutely Macy's. This company has been an absolute train wreck throughout 2020. You had same-store sales down about 20% in the third quarter. They came out in February said they're closing 125 stores in the hopes to save $1.5 billion. A true disaster. They're hemorrhaging money. They have a lot of debt. It's not a good situation.

And what I think Macy's executives still don't quite understand is that once humans get vaccinated, you know what? We actually like shopping online. We're not going back into your big, giant stores with no employees for customer service. Bye-bye, Macy's. I think this company is set up a very challenging 2021.

SEANA SMITH: Well, Sozz, as we have clear losers, there's also clear winners from this pandemic. A couple of retailers have really outperformed their peers over the last several months. What's one or is there one retailer that you would say is the big winner for this year?

BRIAN SOZZI: Big winner, Seana, is Lululemon. What you can't see on camera is I'm wearing joggers right now, and yeah, they're from Lululemon. It's just the new work-from-home attire, and you continue to see it in Lululemon's earnings.

Now, their stores were closed in the second quarter, so you only saw same-store sales up about 8/10 of a percent. But the company is going to report earnings on December 10, and a lot of analysts that I talked to on the Street, they're looking for a blowout quarter. Same-store sales potentially near 10% increase. That is huge. You're not seeing those gains anywhere else.

Bottom line is this. The company continues to innovate. People continue to spend $130 on these pairs of joggers and various clothing from the company. And oh yeah, in the middle of the year they spent $500 million to buy Mirror, and you walk into a Lululemon store now and you see Mirrors start to be on sale. It's a good story right now and probably a good story for 2021 too.

SEANA SMITH: Hey, Sozz, I want to ask you about that Mirror purchase because I think a lot of people were questioning whether or not that $500 million acquisition made sense, if it was going to outperform here over the next-- I mean looking beyond 2020, beyond 2021, if it was going to be a winner. But it sounds like you think it actually was the right move and it could compete even though there's a clear winner out there, and that's Peloton.

BRIAN SOZZI: Look at it now. Ever since Lululemon made that acquisition of Mirror during the early summer, Peloton's valuation has gone even higher. So it tells you that Lululemon, while they paid out through their nose for this to buy Mirror, it looks to be at a somewhat decent valuation given where Lulu-- where Peloton has come since.

But the reason why they pulled the trigger is because a lot of Mirror shoppers obviously go to Lululemon. So there was a lot of overlap there, a lot of great data that will help them sell more tight joggers for $130 a pop and really expensive Mirrors.

ADAM SHAPIRO: Brian, I know that Target was our company of the year last year. They're the most interesting story of the year. Why so?

BRIAN SOZZI: Well, Target is not-- it's not a new retailer, Adam. They operate 1,900 stores, yet they have put up growth rates this year as if they were-- they have reinvented the wheel or they're some kind of new magical retailer selling magical products. But really, they had 155% same-store online sales growth in the third quarter. Again, that's another-- that was another triple-digit increase for this company. Same-store sales up in the third quarter 10%. You don't see retailers put up numbers like this, let alone a company that has 1,900 stores.

For them, it really boils down to two things. I like the new Ulta deal they signed. You will see more shops opening up in Targets-- Ulta, the shops, opening in Target by the fall of next year.

Also too they have just reinvented their business. I can order something right now from Target, drive up into the parking lot. A Target employee brings me out my $200 in groceries and call it a day. That's a great ease and convenience.

ADAM SHAPIRO: So let's look forward. After we've dogged Macy's, we've praised Target, what's going to happen to big-box stores? Are malls dead? Is there going to be a mall that anyone wants to go to?

BRIAN SOZZI: Malls are done, Adam. I hate to be the bearer of bad news and end this fine, fabulous special with being a Debbie Downer, but malls essentially no longer serve any purpose. I can go to Target. I can have now same-day delivery through their ship service, and they can deliver me my clothes, my new Levi's jeans, which also is another win with Target because they're now selling Levi's jeans inside of Target. They can have it in my house for under an hour. Why do I need to go to the mall and risk getting sick?

SEANA SMITH: No. Less and less people are traveling to malls, especially these days, but also just before the pandemic, it already seemed like it was dying here. All right, Sozz, thanks so much for joining us.