National Returns Day
As ungrateful as it may sound, heaps of well-intentioned but completely misfired festive presents were unwrapped on Christmas Day, 2019. Bath products we’ll never use, box sets we’ll never watch, and socks we’ll never wear. When Santa gets it wrong, investors take the hit!
To retailers’ horror, record numbers of consumers are rummaging for receipts and quietly taking unwanted gifts back to stores for refunds. January 2nd, 2020, will be known as National Returns Day for a reason! 1.9 million packages were returned in the United States, and that threatens to bite into quarterly earnings numbers and force investors to concede some of their profits from the Santa Claus rally.
UPS, the multi-billion-dollar courier, handled a million return parcels a day through December, so it’s well qualified to shed light on this potential leak in retail profits. The delivery giant believes returns are a necessary evil of strong consumer confidence, and simply of last year’s record gift-giving volume. However, a retail rush toward free shipping on both orders and returns certainly hasn’t helped!
Greg Buzek of IHL Group has been researching this topic for many years and tips the industry’s losses to eclipse a trillion! He’s also steering us well clear of apparel-focused retail stocks, whose return rates can hit a whopping 50% due to inconsistent sizing across brands. It’s another factor to ponder over, for sure. Next week’s earnings releases should be full of surprises!