Retail stocks are a vicious minefield

Disappointing earnings from Express highlight the uncertainty currently surrounding the retail sector.

By Jim Cramer Dec 4, 2013 11:31AM

Express store in Manhattan (© James Leynse/Corbis)Express (EXPR)? Say it ain't so. This terrific chain of 630 stores has delivered andTheStreet.com logo 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.

Jim Cramer's headshot

 

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.

 

More from TheStreet.com

·         Cramer: One sector has to step forward

·         Major League Soccer wants a brand new television deal

·         Pumpers, dumpers want to turn JCP into another Best Buy

 

39Comments
Dec 4, 2013 1:24PM
avatar

How about that scum Harry Reid exempting his staff from ObummerCare?......

 

Story is on CNN.........

Dec 4, 2013 1:13PM
avatar
This is no mystery really.  Folks will still spend where they find value or comfort.  The bottom 60% of Americans are facing a continuing struggle to survive.  The old days of throwing a credit card down and unguilting oneself for Christmas may be just about over.  We need to look to the poorer countries to understand retail now.  In just a few short years we have become a third world nation.  Yes we still have pockets of wealth but they will be scoured out in time.  Keeping wages and income in check is the game for now.  You see some of these municipalities attempting to raise wages.  They will be met with severe issues from employers who are in the drivers seat when it comes to wages.  Between imports and illegal workers the American citizen worker is caught, trapped, and has no where to turn.  Illegal worker employers couldn't give scat about the laws about minimum wages.  They aren't hiring illegals to be nice you know.
Dec 4, 2013 1:28PM
avatar
To me Obama is talking to an audience I have no contact with.  I believe little of anything this guberment says about anything.  Our guberment is in the business of taking what they want and figures they can just BS us for the reasons.  Get your gun, climb a tree, and wait for the right time.
avatar

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.

Dec 4, 2013 1:48PM
avatar

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".

Dec 4, 2013 1:40PM
avatar

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?

Dec 4, 2013 1:27PM
avatar

 

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.

 

 

 

 

Dec 4, 2013 2:05PM
avatar

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 ?

Dec 4, 2013 1:55PM
avatar

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.

Dec 4, 2013 1:34PM
avatar
Well, if you didn't know about sucker's rallies you just learned real quick...They happen often, manipulators love them....And the socialist village idiot doing his thing and wanting more wealth redistribution, what else can go wrong? Plenty sadly....We have 3 and a half hours to go. we will not give up, as nasty as this looks...More later.
Dec 4, 2013 12:14PM
avatar
If it isn't made in America just say no!
Dec 4, 2013 1:41PM
avatar
Barry, So you`re an expert on blow up dolls.What a surprise.
Dec 4, 2013 1:35PM
avatar

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.

Dec 4, 2013 1:44PM
Dec 4, 2013 2:42PM
avatar

I guess Wall Street didn't want a date from Yellin at all for tapper.

Dec 4, 2013 1:46PM
avatar
Let me explain it to you, Jim Cramer:  a retail store is where something real happens and the real economy is hurting. A retail store is not some "make believe" tech or bio or alternate energy company fueled by dreams and funny money, if cash registers don't ring then it goes under.  Capish?
Dec 4, 2013 12:38PM
avatar

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. 

Dec 4, 2013 12:20PM
avatar

"That is if there is any clarity to be had."

 

That is the $64,000 question.

Dec 4, 2013 2:54PM
avatar
Obama says tying his shoes in the morning a defining challenge.
Dec 4, 2013 1:27PM
avatar
Retail-- don't you think the incentive behind the illumination is the massive derivatives debt they are buried in? It was a pretty corrupt set-up... import foreign garbage, sell units based on the same wacky formula derivatives are syndicated by and BE SURE the stock price is heavily in favor of the executives? Ant REAL enterprise person knows that deep discounts require constant mania for a breakthrough into the black. So... when you have YEARS of stagnation, the only explanation is the shadow debt kept offshore or in non-reconciled derivatives. 
In a nutshell... the REAL purpose of Quantitative Easing has been the dark pool funding of dead "global" inherited business platforms who couldn't do what their ancestor did to grow it. WEALTH has to go. Blather all you want, thumb me down... but all you have are game tokens and we are in for a MAJOR SHIFT as early as Thursday. 
Close the banks, end the Federal Reserve and GET RID of Wall Street. The world is wise to the corruption already. If we don't deal with it NOW, we won't be here after the New Year. 
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124
124 rated 1
279
279 rated 2
454
454 rated 3
606
606 rated 4
675
675 rated 5
690
690 rated 6
622
622 rated 7
453
453 rated 8
301
301 rated 9
111
111 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
BBBYBED BATH & BEYOND INC10
TWXTIME WARNER Inc10
COPCONOCOPHILLIPS9
HDHOME DEPOT Inc9
VZVERIZON COMMUNICATIONS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.