Retailers are overhauling their operations as technology redefines the shopping experience. Still, secular trends are working against their favor as e-commerce continues to take share from brick and mortars. This puts retail stocks in a tough spot, and over the past six months, the industry has pulled back by 15.8%. This drop was seriously disappointing since the S&P 500 stood firm.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Keeping that in mind, here is one consumer stock boasting a durable advantage and two we’re steering clear of.

Two Consumer Retail Stocks to Sell:

Dillard's (DDS)

Market Cap: $5.68 billion

With stores located largely in the Southern and Western US, Dillard’s (NYSE:DDS) is a department store chain that sells clothing, cosmetics, accessories, and home goods.

Why Do We Think Twice About DDS?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations

2. Forecasted revenue decline of 1.4% for the upcoming 12 months implies demand will fall off a cliff

3. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 2.2 percentage points

Dillard’s stock price of $357.20 implies a valuation ratio of 11.7x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than DDS .

Sportsman's Warehouse (SPWH)

Market Cap: $42.13 million

A go-to destination for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more, Sportsman's Warehouse (NASDAQ:SPWH) is an American specialty retailer offering a diverse range of active gear, equipment, and apparel.

Why Should You Dump SPWH?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand

2. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term

3. High net-debt-to-EBITDA ratio of 26× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Sportsman's Warehouse is trading at $1.15 per share, or 1.3x forward EV-to-EBITDA. To fully understand why you should be careful with SPWH, check out our full research report (it’s free) .

One Consumer Retail Stock to Buy:

Sprouts (SFM)

Market Cap: $13.48 billion

Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ:SFM) is a grocery store chain emphasizing natural and organic products.