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Retail stocks: Nordstrom, Gap plummet after earnings fall short

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Yahoo Finance's Jared Blikre breaks down the market's negative reaction to many retail stocks on Tuesday.

Video Transcript

BRIAN SOZZI: All right, let's go over to Jared Blikre who's standing by with a look at some of the retail stocks after hours. Gap earnings out. Nordstrom earnings are out. Jared, what do you have for us?

JARED BLIKRE: Sozzi, you're not going to believe this. And first of all, I feel for you because I know how cold it is out there. But let's get to the YFi Interactive where we see Nordstrom down 22% after hours. Just check that out right there. I'll go over some of the numbers. We're not going to dwell on because I want to leave you, Brian, something to do tonight and tomorrow morning, which I know you will.

Here's Gap. It is down 15%. Let me just go through some of the numbers. So Gap third-quarter EPS, $0.39. Guess what? The Street was looking for $0.55. That is-- oh, excuse me. That is Nordstrom, so I'm going to go back there.

Nordstrom missed on EPS. That was supposed to be-- the Street was expecting $0.55. It came in at $0.39. Some of the other stats not too bad, but you can just tell from Eric Nordstrom, the CEO's tone in the letter, what he's dealing with. He says, "Work is also underway to improve merchandise margin across the company and ensure we have the visibility and flexibility we need to serve our customers seamlessly despite global supply-chain challenges." Lots of key words that we've been hearing from other companies as well.

Here's Gap down 16% right now, and their full-year forecast seeing net sales about 20%. Previously they saw 30%. That is a huge reduction. Comp sales up 5% versus 2019, but guess what? In Old Navy, those comp sales are down 9% versus that two-year benchmark.

So I'm going to move on to our heat map because we had some retail earnings this morning that were truly, truly disastrous, and we're just going to take a look at some of those stocks right now. I'm going to turn off these after-hours quotes so that we can focus in on the action, but here's Best Buy. This is a stock that's down 17%.

And some of the others are in a similar situation. Abercrombie-- or excuse me, let me look at some of these down here. Some of these stocks so small it's difficult to see them on this heat map now, but Urban Outfitters down 9%.

However, a lot of these stocks have bounced back over the last month. Here is what this heat map looks like on a trailing one-month basis. Some of these smaller guys have made some huge moves. Dollar Tree is up 40% over the last month, and you can see on your screen there from the lower left to the upper right.

And this is as we've seen the value trade once again kind of expanding, and we see the yield curve marching upward. We had a lot of movement. Fed has been in play on that-- with that. I'm not going to get into all the wonky details, but I want to contrast what you're seeing here.

This is the value trade over the last month compared to what ARK has done over the last five days, and this is an incredible showing here. Besides Tesla, which literally takes up half the screen, up 5%-- and thank goodness for them, right? Roku down 18%. Zoom down 21%. So there's been a real dichotomy over what has happened simply in the last month here.

And, Sozzi, I know you're going to be all over a lot of these earnings, and let me just-- let me just back this up to a year-to-date look. So some of these names are still holding on to incredible gains. Home Depot, Lowe's each up more than 50%. Give you an idea of what those year-to-date charts look like.

But it's a different story for a lot of these other retailers. And admittedly, some of these were meme stocks. Here's Macy's. It was a meme stock earlier in the year, but they've managed to build on [INAUDIBLE] They've managed to really enact their transformation strategy, as you talk about quite a bit, Brian. 200% up year to date.

I'm sure they're going to take them, but really gives you pause here to think what is in store for investors as we head into the rest of the year. Everybody wants to know what to buy. Maybe a little bit of both. Maybe a little bit of value. Maybe a little bit of growth here, Brian.

BRIAN SOZZI: Thanks so much, Jared. Those are tough moves by Gap and Nordstrom there.

Again, but you're seeing now a pattern here. You saw it with Best Buy. You saw it with Dick's Sporting Goods. Now we're seeing it with Gap, seeing it with Nordstrom. And we have really these negative reactions to earnings by a lot of specialty apparel retailers. So a mental note there for traders as we move forward in the retail reporting season.