The S&P 500 Consumer Discretionary Index saw a negative return of 7.6% in May, versus a 6.4% decline for the overall S&P 500 index, according to data compiled by S&P Global Market Intelligence.
Real estate stocks led the gains during the month with a total return of 1.2%, while energy stocks were the biggest losers with a negative 11.1% return.
Among the 63 constituents of the consumer discretionary sector as of May 31, five were listed as part of the weakest 10 performers of the S&P 500 index.
Four of the five worst-performing consumer discretionary companies were from the apparel industry.
Calvin Klein brand-owner PVH Corp., which on May 29 issued a profit warning for full year 2019, citing volatile foreign exchange rates and challenging economic conditions, had the highest negative return at 33.9%.
It was followed by activewear company Foot Locker Inc., which posted a loss of 31.2%. Foot Locker's first-quarter adjusted EPS grew year over year to $1.53 from $1.45, but still missed the analysts' expectations for the period. The company was one of the footwear retailers that urged U.S. President Donald Trump to immediately remove the footwear category from the porposed tariff list on Chinese goods.
Department store chain Kohl's Corp. saw its total return decline by 30.6%. Shares of the Wisconsin-based retailer fell almost 10% May 21 after the company said its first-quarter earnings slid 5% year over year. CFO Bruce Besanko expressed disappointment with the tariff hike, which took effect May 10 and pushed the company to cut its fiscal 2019 outlook.
Meanwhile, The Gap Inc. recorded a loss of 28.4%, and Capri Holdings Ltd.'s total return declined 26.3%.
The weakest performers of the month were not the only companies concerned with Trump's 25% tariffs on $250 billion worth of Chinese imports. Multiple retailers said they may have to raise prices to offset the increased costs and anticipated sales decline. Neil Stern, a senior partner at McMillanDoolittle, noted that the tariffs are expected to negatively hit retailers in the fourth quarter, which includes the critical holiday shopping season.
"Retailers will have no choice but to pass those costs onto the consumer. I think it's a good assumption that it will reduce sales … some consumers will choose to buy less or buy something different," Johan Gott, a principal with A.T. Kearney, told S&P Global Market Intelligence on May 30.
Target Corp. was the top consumer discretionary performer for the month with a return of 4.8%. Target shares rose 8.4% in premarket trading May 22 as the company's first-quarter earnings grew 15.9%, beating analysts' estimates. Nevertheless, the general merchandiser is one of the retailers that said it will have to raise its prices due to the tariffs, even as it reaffirmed its guidance for fiscal 2019.
Hotel operator Hilton Worldwide Holdings Inc. recorded a gain of 3%, making it the second-best performer. Its shares soared more than 7% on May 1 after its first-quarter earnings surpassed analysts' expectations. The stock peaked at $94.05 on May 16 before declining during the final weeks of the month.
Dollar General Corp. and McDonald's Corp. both saw returns of 0.9%, while Royal Caribbean Cruises Ltd. posted a 0.7% gain and Virginia-based automotive retailer CarMax Inc. returned 0.5%.