There's a rift in the retail sector.
While companies like Calvin Klein-owner PVHÂ are shuttering stores and cutting jobs, some e-commerce plays are soaring above the rest.
That reflects an acceleration of a retail trend that was in place before the stay-at-home phase of the Covid-19 pandemic, Strategic Wealth Partners President and CEO Mark Tepper told CNBC's "Trading Nation."
"What you're really seeing here is if you are weak when it comes to your direct-to-consumer strategy, if you're challenged when it comes to your e-commerce abilities, you're going to be obsolete at some point," he said Wednesday. "A lot of these brands are sold through department stores where traffic has been on the decline and [is] virtually nonexistent today."
That hurts the PVH, whose share prices are down 52% this year, although the stock surged more than 9% on Wednesday on news of store closures and layoffs.
It could also hit Gap, Tepper warned, saying that the company's strategy of selling masks for $10 apiece feels like "they're just grasping at straws."
One stock that could go from strength to strength is Stamps.com, Tepper said. The site offers access to all U.S. Postal Service offerings on users' computers.
"What you have here is ... a pure play on e-commerce, and I think there should be a lot more interest in this stock and there's just not enough right now," he said. "E-commerce is obviously accelerating. Stamps.com is seeing much more traffic on their sites right now. When you look at PC postage sales, those are going through the roof."
Stamps.com has also seen customer acquisition skyrocket thanks in part to ShipStation, its e-commerce fulfillment platform that allows sellers to circumvent Amazon, Tepper said.
"That gives small and medium-sized businesses an option as well," he said. "So, I really like Stamps.com here. My take is that you have to have a strong e-commerce and direct-to-consumer presence."
Delano Saporu, chief investment officer and founder of New Street Advisors Group, offered two picks from each side of the spectrum: Gap and Etsy.
"We actually like Gap from a standpoint of value and value-attractive plays," he said in the same "Trading Nation" interview.
"Looking at the past five years, the stock's obviously been beaten down, down about 67%, but looking at the past month, particularly the Yeezy deal announcement, the stock is up," Saporu said.
As of Wednesday's close, Gap shares were up nearly 24% since the company and Kanye West announced their collaboration to develop a Yeezy line that will sell in Gap stores and on its website starting in 2021.
"We believe this is particularly going to be a big thing to look forward to in 2021 when you're thinking about the partnership and the value add that begins from there," Saporu said, noting that Gap has projected the deal could generate $1 billion in annual revenue within five years.
RBC upgraded Gap to outperform from sector perform on Wednesday, citing "secular tailwinds" for its Old Navy and Athleta brands post-Covid. The stock closed up nearly 13% on Wednesday.
All in all, having a strong e-commerce strategy is paramount, Saporu agreed. While Gap could learn a thing or two from West's brand, one retailer that doesn't need as much guidance on that front is Etsy, he said.
"They're seeing strong performance this year and I believe that strength continues, particularly because you're seeing do-it-yourself, selling online brought to the forefront while we're going through the pandemic," Saporu said. "So, I believe that strategy and that trend continues."
Etsy fell nearly 2% on Wednesday. It has climbed almost 80% in the last three months.
Disclosure: Tepper owns shares of Stamps.com. New Street Advisors holds Gap and Etsy.Â
