Alibaba, JD.com, Inditex, Pinduoduo, Fast Retailing and Dollar General are the six companies in the top 25 that reported gains in valuation.
The top 25 global retailers by market capitalization (MCap) reported a 19.4% decline in their cumulative MCap in Q2 2022, observed GlobalData. The leading data and analytics company also notes that the top six US companies - Amazon, Walmart, Home Depot, NIKE, Costco and Target - each lost over $25 billion in valuation.
Ragupathy Jayaraman, Business Fundamentals Analyst at GlobalData, comments: "Due to the stringent lockdowns resulting from the COVID-19 pandemic, retail firms were able to enhance their e-commerce options. Additionally, home improvement and pharmaceutical retailers also benefitted from the pandemic. However, normalcy is returning to markets as more consumers are visiting physical stores."
Additionally, surging inflationary pressures and a hike in interest rates by the Federal Reserve resulted in a broad selloff in stocks in Q2. Retailers are vulnerable to the volatile economic environment as the increasing prices directly impact the consumer's shopping habits. The ongoing Russia-Ukraine conflict has also had an immense impact on their positions, due to the increasing energy prices.
Jayaraman adds: "Amazon was the only organization among the top 25 retailers that lost over $500 billion in its Q2 valuation. Although the company gained substantially from the pandemic, which improved its stocks' performance enormously in 2020 and 2021, inflationary pressures and the market dip in 2022 brought the company's stocks back to its pre-pandemic levels. The company also posted its first quarterly loss in seven years. Nike, Target and adidas each reported more than a 20% decline in their valuation during the same comparison period."
In contrast, Chinese retail giants Alibaba, Pinduoduo and JD.com reported market cap growth in the present cycle. However, the Chinese government's regulatory crackdown on organizations continues to raise concerns for investors.