Are retailers going the way of the airlines?

We may have to declare this group uninvestable, as it's just too hard to figure out who's going to hit and who's going to miss.

By Jim Cramer Jul 11, 2014 12:43PM

A shopper leaves a Gap store in Palo Alto, Calif. © Paul Sakuma/APRemember the late and unlamented Hit Or Miss chain of women's apparel stores?


These days I think that namesake business represents the industry itself, where retailers seem to fall by the wayside only to be resurrected and then get crushed again. The Street on MSN Money


It wasn't that long ago when Gap (GPS) was heralded as one of the great turnaround stories in retail history. But now all of that's being called into question as its comparable-store sales for both Banana Republic and the flagship Gap that we got last night are simply baffling. What gives? I wonder if they know or are just another victim of the retail funk that The Container Store (TCS) used to explain its anemic sales.


Or how about last night's disappointing Rent-A-Center (RCII) numbers? They took my breath away, especially when they cited "macroeconomic weakness." I used to buy this stock on macro weakness, as people would rather rent than buy in tough times. Another unfathomable reason to go with an unfathomable report.


These all come on top of that shockingly disheartening set of comp numbers and gross margins out of Lumber Liquidators (LL), numbers that called the whole concept into question.


I think we are coming to a moment when we may have to declare this group uninvestable, not unlike the airlines of yore. It's just too hard to figure out who is going to hit and who is going to miss. Of course, a premium should be accorded the winners, like Costco (COST), but that's not happening either -- at least for the moment.


I think you cut exposure both ways. You aren't getting paid to take the risk.


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Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio for the stocks Cramer thinks could be winners. The portfolio
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24Comments
Jul 11, 2014 3:00PM
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It's called the internet. no one goes out of the house anymore.
Jul 11, 2014 1:41PM
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Jim please just take your dividends and buy shares with them and stop trying to figure this all out.  You will be way ahead and feel better as there really is no chance this market will collapse for at least another two years.  Bingo, nuff said?
Jul 11, 2014 2:25PM
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MSN  lacks all credibiliy letting this hack post.  at least CNBC warns you that he is a carney
Jul 11, 2014 4:55PM
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The only thing more worthless than having to go through a retailer,
is having to listen to this guy's purported 'advice'. 
Sure, it would be a step in the right direction if we could indeed
omit the middlemen.  Unfortunately our buyers / sellers market is
so large,  it is no longer feasible to trade with our neighbors as
was done in Ye Olde Village days.

We may be able to dismiss the traditional 'hard copy' storefronts,
but E-bay and others will surely supplant those venues. Thus, there
will always be some sort of retailers.  Its not realistic to just 'avoid them'.
Then again, when did Cramer ever make sense?

Jul 11, 2014 3:05PM
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Yeah, it's really bad when my local beer distributor is having 50% off Sam Adams.


Wanna judge the strength of the economy???


Look at sales of men's underwear.


That's right, men's underwear. Last I knew Hanes had blowout numbers. So get out of retail???


ABSOLUTELY!!!  The bad ones I mean. The good ones will go gangbusters. Fickle, fickle.

Jul 11, 2014 2:20PM
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i'll likely die with this idea, but retailers don't have a "product".  they are another service house or distributor OF products that someone else makes.  any cash or profit they have comes from charging more than enough to cover basic expenses. 

 

unlike airlines that ARE a product of sorts even though they provide a "service".  airline manufacturers would not exist if airline companies didn't offer flight as a service (or product you buy and consume). 

 

airlines have a hard time "making profit" because they likely strive to reach that line of not too much, not too little cash at the end of any tax year.  and as long as they can run on some credit line, they are fine.  when they go belly up, no one goes to jail.  just like the bankers or people who run the government. 

Jul 11, 2014 3:41PM
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Guess I've heard that about Men's underwear...Doesn't make a lot of sense..??


Same thing about Women's hemlines.... The Better the Economy, the shorter the skirt.

I think that applies to short-shorts and bikinis also..?

Jul 14, 2014 10:13AM
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A 78% INCREASE in business platforms too inept to actually hire, train and supervise personnel. It can't last.
Jul 14, 2014 10:12AM
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Retail... Airlines... what do they have in common? Administrative degrees in charge, no one with commonsense steering the bus.
WE ARE ALL GONNA DIE if we don't off the degrees and restore competence where it belongs.
Jul 14, 2014 10:11AM
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I'm pretty sure the Ivy League and all it's alumni are going the way of the Dodo Bird. As for retail, it certainly SHOULD go away. Since no one and nothing can sustain without the fake Fed money that is taking us down the drain, a lack of enterprise would wipe YOU out first. Then the rest of the loser psychopaths infecting us. 
Jul 11, 2014 5:49PM
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Retailers couldn't get as bad as the airlines!
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