Today has proven disastrous for many S&P/ASX 200 Index (ASX: XJO) retail shares as the market reacts to news from overseas.
Right now, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) is the ASX 200's second worst performing sector.
It's down 2.9% at the time of writing. Comparatively, the broader ASX 200 is recording a 1.56% slump.
And some of the consumer discretionary sector's biggest names are among its biggest fallers on Thursday.
So, what's going so wrong for ASX 200 retail shares today? Let's take a look.
Why are ASX 200 retail shares struggling?
Some of the ASX 200's most recognisable retail shares are among today's worst performers. And there's a good reason behind their dip.
The Wesfarmers Ltd (ASX: WES) share price is the sector's worst performer, recording a 7.41% fall.
On its heels are those of JB Hi-Fi Limited (ASX: JBH) and Super Retail Group Ltd (ASX: SUL) with falls of 6.34% and 6.03% respectively.
Meanwhile, shares in Harvey Norman Holdings Limited (ASX: HVN), City Chic Collective Ltd (ASX: CCX), and Premier Investments Limited (ASX: PMV) are down 5.35%, 4.49%, and 1.98% respectively.
The ASX 200 retail sell-off seems to have been spurred by United States retail monoliths Target Corporation (NYSE: TGT) and, to a lesser degree, Walmart Inc (NYSE: WMT).
The former released its quarterly earnings overnight (Aussie time) to the market's disappointment.
The near US$100 billion company's earnings per share (EPS) plunged 48% last quarter as it struggled with lower-than-expected sales, supply chain issues, and increased freight costs.
Its share price tumbled a whopping 25% overnight.
Additionally, Target's results dropped just one day after Walmart announced its income had slipped 23% over the quarter amid supply chain issues, higher wage costs, and inflationary pressures.
The major US retailer's tumbling earnings, understandably, sparked concerns a recession could be nigh.
That in turn likely weighed on the S&P 500 Index (SP: .INX) and the Nasdaq Composite (NASDAQ: .IXIC). They fell 4% and 4.7% respectively as Australia slept.
Of course, recessions generally negatively affect consumer spending and, thus, retailers.
Therefore, such talk – and the poor performances of their international peers – is likely weighing on ASX 200 retail shares today.
