Why Temple & Webster, Web Travel and Guzman Y Gomez shares could have even further to fall

Temple & Webster Group Ltd (ASX: TPW), Web Travel Group Ltd (ASX: WEB) and Guzman Y Gomez (ASX: GYG) shares have had a year to forget.

Over the past 12 months the S&P/ASX 200 Index (ASX: XJO) has returned a relatively tepid 2.8%. But that’s a stellar performance compared to these three crashing stocks.

Here’s how these ASX 200 consumer focused stocks have performed over this same time:

• Online hotel booking travel agency Web Travel shares are down 52.3%
• Online furniture and homewares retailer Temple & Webster shares are down 75.6%
• Mexican fast food restaurant chain Guzman Y Gomez shares are down 36.1%

Atop some of their own operational issues, all three companies have faced stiff headwinds amid resurgent inflation and fast rising interest rates, which could see consumers continue to cut back on their discretionary spending.

And despite the past year’s sharp falls, those share price losses might keep coming in the months ahead.

Here’s why.

Temple & Webster, Web Travel and Guzman Y Gomez shares facing headwinds

Bell Potter institutional sales and trading director Richard Coppleson believes that Australia is approaching a recession that could continue to see investors exit ASX consumer stocks

According to Coppleson (quoted by The Australian Financial Review):

I have grave fears that we are heading down that [recession] road and my view remains the same for now: avoid domestic cyclicals, retail and anything tied to the consumer because this could get ugly, really ugly.

We have had the market slapping us in the face and warning us that it may be coming; the selling of retail stocks has been savage and going for a long time. The market can see it coming, even if we can’t yet

Ten Cap’s Jun Bei Liu also expects ASX consumer-oriented shares are likely to face ongoing headwinds this year.

Liu noted:

The consumer was already under pressure prior to recent geopolitical uncertainty, and we expect conditions to soften further as higher interest rates continue to work through the economy.

As if this isn’t enough of a concern for Temple & Webster, Web Travel and Guzman y Gomez shares, the AFR reported that Morgan Stanley expects all three stocks to get booted from the ASX 200 as part of the S&P Dow Jones Indices quarterly rebalance next week.

Losing their spots on the benchmark Aussie index could place these beleaguered stocks under further selling pressure as ASX 200 index tracking ETFs, and some fund managers limited to the larger end of the market, will have to sell their existing holdings.

The post Why Temple & Webster, Web Travel and Guzman Y Gomez shares could have even further to fall appeared first on The Motley Fool Australia.

More reading

• Morgans says these ASX 200 shares are buys
• 3 highly undervalued ASX 200 stocks to target in June with up to 87% upside
• Are Guzman Y Gomez shares a buy after rebounding 28% from a historic low?
• Why EOS, Life360, Nufarm, and Web Travel shares are pushing higher today
• Why are shares in this ASX travel company charging higher today?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group. The Motley Fool Australia has recommended Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.