February 18, 2026

Retail ETFs in Spotlight as US Releases Holiday Season Report Card

The final reading on the 2025 holiday shopping season was released last week, and it delivered a lump of coal to investors. As per the U.S. Census Bureau report released on Feb. 10, 2026, advance estimates showed that December 2025 retail sales remained virtually flat at $735.0 billion, missing economists’ expectations of a 0.5% monthly increase.

On a year-over-year basis, sales increased 2.4%, as the nation’s Consumer Price Index rose 2.7% in December, signaling weak real spending momentum.

For large U.S. retailers, such as Walmart WMT, Costco COST, and even global platforms like Alibaba BABA, which rely on year-end sales surges to anchor their annual earnings, such poor performance tends to keep their profit margin and earnings under notable pressure. This puts retail exchange-traded funds (ETFs), which bundle these major players into a single tradable asset, in the spotlight as investors scramble to reassess their portfolios.

Now, before highlighting a few retail ETFs currently in the spotlight, let us take a closer look at what caused the weak retail sales performance and whether there is a chance of recovery ahead, so you can get the full picture.

While the December stagnation was a surprise, it was not a fluke but the result of several overlapping economic factors, as mentioned below.

1. Persistent Inflation and Economic Uncertainty: Although inflation has cooled from its peak, prices remain elevated, forcing shoppers to be more deliberate. To this end, J.P. Morgan Research noted heading into the season that consumer sentiment was near record lows, caused by unpredictable tariff policies and affordability concerns. The firm cited unpredictable tariff policies and the longest government shutdown on record, which resulted in uncertainty, market volatility, and higher prices, as the primary reasons behind the low consumer confidence.

2. The Pull-Forward Effect: Early promotions and discounts in October and November lured shoppers, with Visa and Mastercard reporting a healthy 4% year-on-year increase for the combined November-December period. This likely pulled spending forward, leaving December dry.

Mastercard’s chief economist noted that consumers shopped early and leaned heavily on promotions to get the best deals, leaving retailers to fight harder for every dollar by the end of 2025.

3. K-Shaped Consumer Behaviour: Recent data reveals a split in the American consumer. Higher-income households remained resilient, but lower-income households are scaling back significantly. Adobe Analytics noted a surge in “Buy Now, Pay Later” usage among younger shoppers, indicating financial strain and maxed-out budgets among key demographics.

Looking ahead, the retail sector’s outlook hinges on the balance between cooling inflation and a moderately rebounding U.S. economy.
Consensus expectations are built around moderating price pressures, stable employment and potential Federal Reserve policy easing supporting a gradual improvement in real consumer spending, particularly for value-oriented and omnichannel leaders. While the December data underscore near-term downside risks to earnings, we may witness some positive growth later in 2026 if demand stabilizes and retailers show cost control, inventory discipline and improved mix.

In a similar line of thought, analysts from Bain & Company project U.S. retail sales to grow 3.5% year over year in 2026, with inflation expected to hover between 2.6% and 3.0%.

Considering the aforementioned discussion, the current situation demands a spotlight on the following retail ETFs that you may add to your watchlist:

State Street SPDR S&P Retail ETF XRT

This fund, with assets under management (AUM) worth $681.4 million, offers exposure to 73 companies from the following sub-industries: Apparel Retail, Automotive Retail, Broadline Retail, Computer & Electronic Retail, Consumer Staples Merchandise Retail, Drug Retail, Food Retailers, and Other Specialty Retail. Its top three holdings include prominent U.S. retailers, Casey’s General Store CASY (1.78%) and Bath & Body Works BBWI (1.76%).

XRT has gained 10.2% over the past year. The fund charges 35 basis points (bps) as fees. It traded at a volume of 4.44 million shares in the last trading session.

VanEck Retail ETF RTH

This fund, with net assets of $265.2 million, offers exposure to 26 companies involved in retail distribution, including wholesalers; online, direct mail, and TV retailers; multi-line retailers; specialty retailers; and food and other staples retailers. Its top three holdings include Amazon AMZN (16.36%), WMT (13.23%) and COST (9.19%).

RTH has rallied 9.5% over the past year. The fund charges 35 bps as fees. It traded at a volume of 0.02 million shares in the last trading session.

ProShares Online Retail ETF ONLN

This fund, with a net asset value of $52.84 as of Feb. 17, 2026, offers exposure to 20 online retail stocks. Its top three holdings include AMZN (23.33%), BABA (9.30%) and eBay EBAY (6.88%).

ONLN has gained 3% over the past year. The fund charges 58 bps as fees. It traded at a volume of 0.006 million shares in the last trading session.

Amplify Online Retail ETF IBUY

This fund, with net assets worth $124.5 million, offers exposure to 81 companies with significant revenues from the online retail business, including traditional online retail; online travel; online marketplace; and omni channel retail. Its top three holdings include Figs Inc FIGS (3.71%), Liquidly Services LQDT (3.62%) and Carvana CVNA (3.11%).

The fund charges 65 bps as fees. It traded at a volume of 0.05 million shares in the last trading session.

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Retail ETFs in Spotlight as US Releases Holiday Season Report Card

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