“Super Saturday” Storm Threatens Retail ETFs

by on December 21, 2009 | ETFs Mentioned:

Despite strong performances from U.S. equity markets in 2009, many businesses are yet to see a noticeable uptick in activity, as consumers have been slow to loosen the pursestrings  and begin spending again. With unemployment rates above 10% and rising (regardless of what the “official” numbers indicate), many retailers have struggled, and many had been hoping for a surge in sales during the holiday season to salvage an otherwise forgettable year.

Holiday Shopping Season Is Winding DownThe season got off to a good start on Black Friday, and many retailers had continued to experience strong enough demand to avoid heavy discounting that can be used to increase sales at the expense of profitability. But a massive snowstorm swept across the eastern U.S. over the weekend, causing many malls to close and forcing shoppers to stay indoors as the shopping season draws to a close. “Super Saturday, the last Saturday before Christmas, is typically one of the biggest shopping days of the year, with an estimated $15 billion changing hands,” writes Rachel Dodes for the Wall Street Journal.

Dodes notes that the pre-Christmas blizzard could have a significant impact on retail sales this year, as many shoppers had been putting off purchases in hopes of finding a bargain at the last minute. In the northeast, a region that traditionally accounts for a quarter of Super Saturday sales, many of those procrastinators were forced to stay indoors for much of the weekend (although most severe weather had passed by Sunday, resulting in a late weekend surge).

The harsh weather conditions may only be exacerbating the decline of store-based retailers in favor of e-commerce alternatives. According to Web tracking company comScore, online retailing grew 4% from the beginning of November through December 18 to $24.8 billion. Online sales for December 15 totaled $913 million, a one-day record. Coremetrics Inc. reported that Web sales for the Friday and Saturday before Christmas increased by 24% compared to the same period last year, boosted in part by the weather in the northeast but also by the convenience and price benefits of online shopping.

Retail ETFs In Focus

The impact of the Super Saturday blizzard remains to be seen, but the weekend’s weather could have several ETFs on the move in the coming week:

  • SPDR S&P Retail ETF (XRT): This ETF invests in many of the companies that take in pre-Christmas spending dollars, and could see December sales take a hit. XRT has gained more than 70% so far in 2009 and has an expense ratio of only 35 basis points.


  • iShares FTSE NAREIT Retail Index Fund (RTL): This real estate ETF has major holdings in several of the country’s biggest mall owners, including Simon Property Group and Kimco (these two account for almost 45% of total holdings). If the traffic that these retail centers missed out on isn’t made up in coming weeks, RTL could lose ground as the year comes to a close. RTL is up about 17% in 2009.


  • Internet HOLDRs (HHH): A negative development for brick-and-mortar retailers would seemingly be positive news for this ETF, which concentrates its holdings into a few internet-based companies. While HHH has allocations to stocks like Ameritrade and Earthlink, almost 60% of its holdings are in Amazon.com and eBay, two sites that should see a big uptick in sales as last minute shoppers audible to deal with blizzard conditions.


Disclosure: No positions at time of writing.