Five Below, Floor And Decor, Gap, Boot Barn, and Shoe Carnival Shares Are Falling, What You Need To Know

What Happened?

A number of stocks fell in the afternoon session after a hotter-than-expected wholesale inflation report fueled concerns about slowing consumer spending. 

The market was rattled by a Labor Department report showing the Producer Price Index (PPI), a measure of wholesale inflation, jumped 0.9% in July, significantly exceeding economists' expectations of a 0.2% rise. This was the largest monthly increase since March 2022, reigniting worries that businesses will be forced to pass higher costs on to consumers, who are already showing signs of price sensitivity. This inflation data has fanned concerns that U.S. tariffs on imported goods could start to translate into higher prices for shoppers. The inflation report landed amid growing evidence of consumer caution, with recent reports highlighting that shoppers are cutting back on non-essential spending, seeking out sales, and trading down to cheaper brands.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Discount Retailer company Five Below (NASDAQ:FIVE) fell 3.2%. Is now the time to buy Five Below? Access our full analysis report here, it’s free.
• Home Improvement Retailer company Floor And Decor (NYSE:FND) fell 4.4%. Is now the time to buy Floor And Decor? Access our full analysis report here, it’s free.
• Apparel Retailer company Gap (NYSE:GAP) fell 3%. Is now the time to buy Gap? Access our full analysis report here, it’s free.
• Footwear Retailer company Boot Barn (NYSE:BOOT) fell 3.2%. Is now the time to buy Boot Barn? Access our full analysis report here, it’s free.
• Footwear Retailer company Shoe Carnival (NASDAQ:SCVL) fell 3.6%. Is now the time to buy Shoe Carnival? Access our full analysis report here, it’s free.

Zooming In On Floor And Decor (FND)

Floor And Decor’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 2 days ago when the stock gained 4.3% on the news that a tame inflation report boosted investor hopes for an interest rate cut from the Federal Reserve. The latest Consumer Price Index data showed the annual inflation rate held steady at 2.7%, reassuring investors who had feared that tariffs could lead to a spike in consumer prices. This milder-than-expected reading gives the Federal Reserve more flexibility to consider lowering interest rates, possibly as soon as next month. A potential rate cut could reduce borrowing costs for consumers and businesses, stimulating more spending and providing a significant boost for the retail industry. Adding to the optimism, reports of a 90-day tariff truce with China further eased concerns about future price pressures.

Floor And Decor is down 15.5% since the beginning of the year, and at $82.38 per share, it is trading 33.7% below its 52-week high of $124.17 from September 2024. Investors who bought $1,000 worth of Floor And Decor’s shares 5 years ago would now be looking at an investment worth $1,191.

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