3 Retail Stocks to Sell in May Before They Crash & Burn

Core Viewpoint - The retail industry is experiencing significant volatility post-Covid-19, with a shift from initial consumer spending booms to a current decline in retail sales due to high inflation and a weakening economy [1][2]. Group 1: Big Lots (BIG) - Big Lots is a discount retail chain that has struggled recently, particularly after a failed expansion into the furniture market, leading to a disconnect between its product offerings [4][5]. - Sales have sharply declined, especially in furniture, prompting a leadership reshuffle, but doubts remain about the company's long-term strategy [6]. - Despite a temporary stock price increase due to meme stock trends, the underlying business is in serious trouble, suggesting investors should sell [6]. Group 2: Leslie's (LESL) - Leslie's is a specialty retailer in the swimming pool and spa market, which saw revenue growth from $928 million in fiscal year 2019 to $1.6 billion in fiscal year 2022 due to increased home entertainment spending during the pandemic [9]. - However, revenues fell to $1.45 billion in fiscal year 2023, with expectations of further declines as the economy reopens [10]. - The stock has faced significant drops, including a 36% decline in one day due to disappointing earnings, and the outlook remains bleak amid rising interest rates and slowing consumer spending [11]. Group 3: Target (TGT) - Target experienced a significant stock price increase from $90 to about $260 between 2019 and 2021, driven by increased consumer spending on various goods [13]. - Earnings per share surged from $5.51 in fiscal year 2019 to $14.10 in fiscal year 2022, but this growth was unsustainable, with EPS dropping to $5.98 in fiscal year 2023 as government stimulus waned [14]. - Although the stock has rebounded from $110 to $162 recently, the lack of fundamental support indicates that Target is another retail stock to consider selling [15].