In a year of soaring stock prices, US retail shares largely underperformed in 2017 as consumers (and investors) abandoned traditional shopping channels in favor of e-commerce platforms. As a result, familiar names such as J.C. Penney, Macy’s and Signet Jewelers slipped this year. So too did diamond-focused miners, amid fears of an excess of rough-diamond supply and questions over the future of consumer demand.
Here are the main points emanating from this year’s stock performances:
1. US retail plunged
Investors showed little confidence in brick-and-mortar retail, moving away from stocks such as J.C. Penney (-62%) and Macy’s (-30%). The latter showed signs of recovery in the final two months of the year as consumer confidence grew ahead of the holiday season. The sector trailed the Dow Jones Industrial Average, which jumped 24% during the year, buoyed by an improving economy. There was a strong contrast between traditional retailers and tech-driven companies, with Amazon’s share price surging 54% this year, while Apple’s was up 46%.
Signet (-40%) suffered along with its retail peers, though it also had company-specific challenges, such as sexual-harassment allegations and problems with its credit services.
2. Tiffany beat its rivals
The arrival of Alessandro Bogliolo as CEO and Reed Krakoff as chief artistic officer, plus some innovative branding decisions, have boosted confidence in Tiffany & Co.
“New management is showing us that they understand the challenges and opportunities, and they are not sitting still,” CNBC cited Citi analysts as saying in mid-December. The bank upgraded Tiffany’s stock to “buy” from “neutral” in time for the holiday season.
Investor behavior reflected this optimism throughout the year: The jeweler’s stock soared 33%.
3. Asian and European stocks (mostly) rallied
A recovery in China and Hong Kong has given new life to the region’s retail sector, with jewelers such as Luk Fook (+67%), Chow Tai Fook (+37%) and Chow Sang Sang (+31%) benefiting in terms of both their sales and their share prices. Those stocks mirrored gains on Hong Kong’s Hang Seng Index, which jumped 36% for the year.
Out of the Far East stocks that Rapaport tracks, Israel-based Sarine Technologies, which lists its shares in Singapore, performed less strongly, declining 44%. An excess of polished diamonds in the Indian manufacturing sector resulted in weaker sales of the company’s machines.
European luxury stocks also had a strong year, driven by a recovery in consumer demand, after 2016’s political shakeups had hit public confidence. Kering, which owns jewelry brands Boucheron and Pomellato, was the top performer, gaining 81% for the year.