L Brands Guidance Cut Could Be Bad Omen For Retail Stocks Ahead Of Holiday Season

L Brands Inc LB shares are tumbling 8.3 percent on Tuesday following negative commentary from management and a 2016 full-year guidance cut. Following Tuesday’s drop, shares of the battered retailer are now down 31.1 percent in 2016.

PreMarket Prep hosts Joel Elconin and Dennis Dick discussed the implications of L Brands’ guidance cut for the rest of the retail sector on Tuesday morning's show. With the holiday season fast approaching, Dick said he is becoming increasingly concerned that the market may be in for “retail hell” in Q4.

Shareholders of stocks such as Nordstrom, Inc. JWN, Kohl’s Corporation KSS, Gap Inc GPS and other retailers could be set up for a big pullback, especially considering how the stocks have outperformed lately.

“We haven’t had retail hell here for a little while, and there have been some pretty good runs in some of these retail stocks,” Dick concluded.

“You’ve got Cyber Monday and the day after Thanksgiving, so you’ve got a lot of events that may determine what kind of holiday season we’re going to have, and it’s not too early to start talking about it,” Elconin added. “Watch out in these retailers. You have a catalyst in L Brands.”

Both Gap and Nordstrom are down more than 2.0 percent on Tuesday following the L Brands news.

Listen to the full interview below:

PreMarket Prep is a daily trading ideas show that focuses on technical analysis and actionable short-term trades. You can listen to the show live every morning from 8–9 a.m. ET here or catch the podcast here.

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