Retail stocks are a vicious minefield
Disappointing earnings from Express highlight the uncertainty currently surrounding the retail sector.
Express (EXPR)? Say it ain't so. This terrific chain of 630 stores has delivered and delivered and delivered. It sure didn't deliver Wednesday, and the company was abject when Michael Weiss, one of the best merchants out there, said, "Results did not meet our expectations."
Shares of the company plunged more than 23% as a result.
This one's shocking. I have come to think of Express as that terrific mid-range player with the best duds for younger professionals. The company is right when it claims itself to be the "premier fashion authority for our demographic." Express is too good for me to be thinking that it screwed up this badly. To me it says the demographic isn't spending.
This report is a remarkable affirmation of just how impossible retail is to invest in right now. As consistent as Express has been of late, Ascena (ASNA) has been inconsistent. The umbrella company for Dress Barn, Maurices and Justice had been like the old chain of woman retail fashion, Hit or Miss, especially since it bought Charming Shoppes not that long ago.
Sure enough, this quarter the acquisition paid off for Ascena, and while things aren't perfect, since it reported the stock is now up as much as Express is down. David Jaffe, one of my favorite retail CEOs, vindicated himself and his chain with this quarter as much as Weiss did the opposite.
We have seen schism after schism in the group, with the dichotomy best represented by the de-coupling of Ross Stores (ROST) -- downgraded today by Credit Suisse – from TJX (TJX). Both have been ideal mid-ranged discounters with an off-the-rack feel. This quarter, though, TJX became the ultimate close-out play, buying product hand over fist from lagging retailers. Plus, it has two terrific kickers: Home Goods, a cheaper version of the red hot Williams-Sonoma (WSM), and a growing European operation that never went bad during the hard times and is now thriving. Ross, on the other hand, seems to have the wrong merchandise, and shareholders can only hope that the stock hasn't topped out.
Six months ago Urban Outfitters (URBN) was a darling, with Free People -- and, again, Williams Sonoma analogue Anthropologie -- leading the way. Now, though, it's looking like a failed turnaround play, with its flagship store, Urban, faltering badly.
Heck, we have retailers split month to month. J.C. Penney (JCP) was bad, but now it's good. Gap (GPS) was bad, now it's good. Sears (SHLD) is good, now it's bad -- or, at least, the restless, redeeming limited partners of Eddie Lampert's hedge fund might be thinking it is bad, as they are voting with their feet.
Oh and let's not forget that Wal-Mart (WMT), Target (TGT) and Kohl's (KSS) are missing badly while Costco (COST) is hitting it out of the park. Meanwhile Amazon (AMZN), well, is Amazon, meaning it's amazing.
The conundrum extends to hard goods: GameStop (GME) and Best Buy (BBY) seem to have run out of gas. But have they? GameStop de-risked itself with lowered expectations, but the stock has kept going down since then. Best Buy feels over-recommended. Is there really anyone left to recommend?’
It's just a vicious minefield, and I don't know anyone who has been able to navigate it.
Perhaps the best thing to do is to just stay away from the darned thing until we get some clarity.
That is if there is any clarity to be had.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long COST and TJX.
Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio and uncover the stocks Cramer thinks could be winners.
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How about that scum Harry Reid exempting his staff from ObummerCare?......
Story is on CNN.........
Let's see taking out the top ten percent wage earners the average American only makes $38,000 a year.
Hmmm the US retail industry is doomed to disappear just as the middle class has.
Are we ready for the Santa Claus rally?I bought some great stocks at a discount this morning.
This peace and prosperity our fine President has brought us makes me proud to say
"I`M AN AMERICAN".
DLH:You`re thinking of the wrong party.The only thing I ever see from the Repubs is finger
pointing,blame,crying and bellyaching.Obama has 19 major accomplishments.You heard
no solutions from McCain or Romney when they ran.McCain constantly said "if elected I will
serve"Is that the best the Repubs have?
My wife shops at Chicos so I own a couple share of that. I tell her to spend whatever she wants.
Elsewhere in the news, they are dropping mice on Guam.
So I'm investing in mice.
Anyway, look on the bright side. I'd rather see a Cramer article than a Mirhaydari article.
Barry, Look who`s talking !You use the "N" word.I`m surprised Obama won in 2008 with
so many racists.Of course, McCain is such a loser.You come up with a good Republican
and I`ll vote for them.I kinds like Christi but I need to hear more.Do you see how fair I am ?
Approval rating don`t tell the whole story.If Obama didn`t have dark skin his approval rating
would be 60% or 70%.How many times have you heard Archie Bunker types say "I`m not a
racist, but"?Then they blame every thing wrong for the last 50 years on Obama.
NTU:We`re at a resort.I still keep track of events.I`m a news junkie.We have plenty of time
for the other.Thanks for your interest.
My daughter is 28 Jim and all the winners you see are what she is into. If you need guidance I suggest you ask your daughter what is working right now.
"That is if there is any clarity to be had."
That is the $64,000 question.
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