Retailers are overhauling their operations as technology redefines the shopping experience. But many seem to be moving too slowly as their demand is lagging, causing the industry to underperform the market - over the past six months, retail stocks have shed 13%. This drawdown was worse than the S&P 500’s 4.7% fall.

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. Taking that into account, here is one consumer stock boasting a durable advantage and two we’re passing on.

Two Consumer Retail Stocks to Sell:

Kohl's (KSS)

Market Cap: $785.9 million

Founded as a corner grocery store in Milwaukee, Wisconsin, Kohl’s (NYSE:KSS) is a department store chain that sells clothing, cosmetics, electronics, and home goods.

Why Is KSS Risky?

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. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable

3. High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Kohl's is trading at $7.11 per share, or 5.8x forward P/E. To fully understand why you should be careful with KSS, check out our full research report (it’s free) .

BJ's (BJ)

Market Cap: $15.73 billion

Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE:BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.

Why Are We Wary of BJ?

1. Annual sales growth of 9.2% over the last five years lagged behind its consumer retail peers as its large revenue base made it difficult to generate incremental demand

2. Gross margin of 18.3% is below its competitors, leaving less money for marketing and promotions

3. Subpar operating margin of 3.9% constrains its ability to invest in process improvements or effectively respond to new competitive threats

At $118.51 per share, BJ's trades at 28x forward P/E. Read our free research report to see why you should think twice about including BJ in your portfolio, it’s free .

One Consumer Retail Stock to Watch:

Ollie's (OLLI)

Market Cap: $6.80 billion

Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ:OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.

Why Does OLLI Catch Our Eye?

1. Fast expansion of new stores to reach markets with few or no locations is justified by its same-store sales growth

2. Locations open for at least a year are seeing increased demand as same-store sales have averaged 4.3% growth over the past two years

3. Market share is on track to rise over the next 12 months as its 13.5% projected revenue growth implies demand will accelerate from its five-year trend