Retail, Restaurant Stocks Down on Obamacare Ruling (LULU, ROST, WMT, TGT, HD, CMG, MCD, YUM, SBUX)

In what might seem to be an anomaly, retail stocks are getting dumped on today following the US Supreme Court’s ruling upholding Obamacare. An retail group, the Retail Industry Leaders Association (RILA), has published its take on what the impact is likely to be on retailers:

With the Supreme Court decision now behind us, the focus must turn to the employer-mandate and the effect that impending changes to employer-sponsored coverage will have on the nearly 170 million Americans who receive healthcare through their employer.

President Obama repeatedly assured Americans that if they liked their health insurance, they could keep it. However, today, with just 17 months until the law takes effect, and no meaningful implementation guidelines available for employers, those assurances are in doubt.

While retailers are committed to continuing to provide health coverage to their employees, overregulation jeopardizes their ability to do so.

RILA continues to urge the Administration to protect retailers’ ability to offer quality, affordable coverage that fits the unique needs of their workforce and not to undermine the flexible, voluntary system that provides coverage to millions of employees and their families.

The president of the National Retail Federation said:

This law will have a dramatic, negative impact on every employer and employee in the United States and further constrain job creation and economic growth.

These industry concerns have spilled over to investors today, who are just as uncertain, if not more, of the effect that the Supreme Court ruling will have on retail stocks.

Lululemon Athletica Inc. (NASDAQ: LULU) is down about -7.4%, but that is largely due to a report that David Einhorn and Greenlight Capital have taken a short position in the clothing maker.

Ross Stores Inc. (NASDAQ: ROST) is off -5.3%, Wal-Mart Stores Inc. (NYSE: WMT) is off -1%, Target Corp. (NYSE: TGT) is off -0.7%, and Home Depot Inc. (NYSE: HD) is down -0.6%.

Restaurant stocks are harder hit because fewer restaurant companies offer health care benefits to a staff of largely part-time employees. Chipotle Mexican Grill Inc. (NYSE: CMG) is down -5%, McDonald’s Corp. (NYSE: MCD) is down about -0.9%, Yum! Brands Inc. (NYSE: YUM) is down -2.4%, and Starbucks Corp. (NASDAQ: SBUX) is down -2.6%.

The true impact of Obamacare on retailers and restaurants will likely come in figuring out how to meet still-to-be-determined regulatory requirements. It’s too early yet to declare the unspecified effects of the now-legal healthcare law the death of retailing in America. It makes for good sound bites though.

Paul Ausick