GlobalData points out that this decline was primarily triggered by a varied earnings outlook for FY2023, which raised concerns among investors.

Gracio Benher, business fundamentals analyst at GlobalData, believes the hesitation stems from the contrasting performance of leading retailers during the third quarter (Q3), where China-based PDD Holdings saw substantial gains driven by robust earnings and favourable market conditions, while Amazon and NIKE experienced market value losses due to factors like weak consumer spending and increased delivery costs.

“This divergence in performance raises questions about the sector’s stability and the challenges it faces,” he adds.

On a quarter-on-quarter (QoQ) basis, PDD Holdings, the owner of fast-fashion company Temu, gained the most with its market value increasing by $34bn to reach $126bn at the end of Q3. On the other hand, Amazon lost almost $38bn during the same period.

GlobalData explains PDD stock received a boost from robust second-quarter earnings, underpinned by its robust business model focused on offering discounted and private label products in China’s tier-2 and 3 cities. Additionally, the company’s online agricultural platform, which delivers fresh farm produce to consumers, further contributed to its success.

This, adds GlobalData, along with the crackdown by the Chinese antitrust regulators on Alibaba led to the e-Commerce giant terminating the longstanding merchant agreements and cutting down on its aggressive promotional activities, creating additional growth opportunities for PDD Holdings.

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E-commerce giant Amazon’s stock shed 2.8% in its market value during the third quarter on the back of weak consumer spending and an expected hike in delivery costs as a result of increasing fuel prices.

Nike’s market value tanked by 19.2% which resulted in the sportswear giant losing over $32bn in market value during the third quarter. This was impacted by weak Q3 earnings and a gloomy Q4 outlook, as well as the slow-recovering Chinese footwear segment, also its second major market, observes GlobalData.

Benher concludes: “The short-term outlook for the retail sector remains positive, with retailers expected to benefit from a revival in consumer spending during the upcoming holiday season, which is expected to touch and go beyond the pre-pandemic levels for first time.”

However, he cautions companies might still need to navigate through headwinds such as rising inflation and price-sensitive customers, who may seek competitively priced alternatives.

Earlier in September, Nike reported flat Q1 2024 sales with with an industry expert stating that “even the best sportswear brands are vulnerable in a highly inflationary market” which highlights risks for wider sector.