Gas prices are hitting retailers

The trend will make life more difficult for the companies that aren't making the best business decisions.

By Jim Cramer Mar 16, 2012 9:50AM

Image: Buying gas (© moodboard/Corbis/Corbis)If you didn't know any better, you would say that Thursday was the day retail showed its true colors. That's because we discovered that gasoline at $4 does matter.

 

How else can we explain Vera Bradley's (VRA) sorry projections for its next quarter or the disappointing outlooks for Guess (GES) and Rue 21 (RUE)? How else do we deal with the decline in the stock of Ross Stores (ROST).


First, I would say that as much as the conclusion seems cogent, each of these stocks is very different. Vera Bradley, a controversial equity, has set itself up for difficult comparisons because it has a strategy of quick turns based on fashion, a very dicey game plan. 


There are lots of shorts in this accessory name, and the guidance makes it pretty clear that it can't deliver. Why else would it say that the next quarter is looking for 27 cents to 29 cents a share when Wall Street is looking for 32 cents? But it kept the annual guidance, and I question -- as much as I don't like the stock -- exactly how poorly the company is doing. 


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Guess? Tough, tough business. They have to guess at what consumers want each quarter, and I think it guessed poorly. Remember, it has a youthful clientele and it's notoriously fickle. Still, $2.50 to $2.65 vs. $3.20 and change says it's way off track.


Gas prices getting too high for you? The following video offers some ways to save on the cost of driving.


Post continues below.

For RUE, it's hard to tell. It sure didn't make you feel terrific about the future, and it is a momentum stock. You have to have numbers raised, not lowered. But it's a 20% grower, with only a 17 PR. I wouldn't give up on it.

 

And that brings me to Ross Stores. Ross did the number. Ross gave good guidance. Ross bought back stock cheaply. Ross' game plan is still intact. You've got 7% comps and a revenue number that was superb. Was this chain of off-price apparel goods hurt by gasoline?

 

No, not at all. I think the market has it wrong. This stock is a buy. Right here. Right now. Forget the other guys. They have problems. Ross doesn't. Profit taking pure and simple. What an opportunity.

 

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Action Alerts PLUS,  which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

167Comments
Mar 16, 2012 12:11PM
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WOW what a shocking headline. Sarcastic 

Gas prices are high and you think it will hurt businesses and shopping? Nah, get out of town.

 

I mean that isn't rocket science, if gas prices are low the economy will be just fine, keep them up and you can forget about 75% of Americans going out shopping and spending money.

Mar 16, 2012 12:19PM
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I am just so sick and tired of hearing that demand is up and availabilty is down. The Presdident is going to tap federal reserve to give relief at the pump. You want to give relief make it illegal for wall street to speculate on oil futures that is what is driving the price through the roof not supply and demand. All we hear is that there is no quick fix when in fact there is it is called the law and one should be passed to control wall street speculators.
Mar 16, 2012 1:25PM
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What the heck has Obama done to increase production of natural gas and oil in the USA since he took office? The press killed Bush when oil prices rose and oil companies had record profits. Where is the outrage now? We should be doing everything possible to produce more oil in the US NOW! We are going to be dependent on oil for many years to come unless we start burning coal in our cars. Nobody wants to see oil spills anywhere in the world but we need oil and our servicemen are going to have to keep fighting and dying overseas until we do everything in our power to develop our own natural resources. Electric cars are fine but you still need to burn coal, oil or NG to produce the electricity as the wackos say they are for windmills until someone attempts to build them and there is always some tortoise or something living where they want to build solar plants. Should we dam all the rivers for hydro power? Why can't we get somebody to run for office that puts the American people first and not their own political party? 
Mar 16, 2012 1:23PM
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 All Obama has done is help the people on WELFARE get more for free, for longer and a better college education then children do from hard working families.  I know a family living next to me who is black and their daughter went for basically free to the same school as my child and my child made honor roll, applied for grants, scholarships,etc...but we didn't get a dime for free. How is that fair? It's not a prejudice thing on my part it's just not fair and I don't understand it. Plus all these grants for inner city kids...if they graduate they go to school for almost nothing? WHY? because I have a decent home in a nicer area and take care of what I live in my child suffers but if I live in a ghetto area my child goes to college for free? Oh and lets not forget the welfare people get free cell phones now to. WT F?
Mar 16, 2012 12:37PM
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Wow Jim Cramer, it only took you 4 years to figure out that as gas prices keep going up that the 50% of Americans making less than 50K a year and living on a budget, will stop spending money at retailers. When they stop spending money at retailers, the bottom line of those retailers will be affected. Got news for you, as the Gas prices continue to soar, more people will stop spending money. And when that happens, people are going to start losing their jobs because retailers are not going to be able to afford their employees. Guess what is coming soon, yep, Higher unemployment. And as unemployment starts to rise again, more people are going to stop spending money. The government wants to improve the economy, Wall street wants to improve the economy. Figure out a way to get gas prices back down to about $2.00 a gallon, I guarantee the economy will pick back up!!!

Mar 16, 2012 12:28PM
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Obama told us before he was elected he would like to see gas prices above $5/gallon so people would be forced to buy more efficient cars and POS electric no-rides no one wants. Didn't anyone listen to what he said? The only reason his popularity hasn't totally tanked is because the media is proping him up. He is an example of the power of large groups of stupid people. Anyone who still supports this Prez is an idiot. The Prez cant effect gas prices? BS, of course he could (if he wanted too).

Mar 16, 2012 12:58PM
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Gas prices will continue to be high as long speculators are allowed to artificially raise them.

Government, for once, needs to intervene and get rid of these speculators.

Both parties are guilty of playing by the oil lobby rules.

Mar 16, 2012 12:15PM
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Wow, who knew that higher gas prices would have an effect on transportation? This article is f-ing stupid. If you have higher gas prices, then the cost on everything goes up. If you tax companies that provide a service, well the cost to the customer goes up. Common sense would dictate that, but this country seems to be at a loss in that department..that is how Obama happened.
Mar 16, 2012 1:30PM
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Why can't the President, by executive order, ban certain commodities which are critical to life from the speculating market.?  Seems that things like wheat, corn, heating oil and propane  and yes gasoline should not be the subject of profiting for doing nothing..  Wouldn't that tend to stabilize the economy and prevent hurting the people who can least afford it ? I'm sure not inclined to welcome government  over-regulation but it's clear that desperate times call for desperate  measures..
Mar 16, 2012 12:41PM
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So long as the oil companies get theirs, that's all that's important.  It's ridiculous that gas jumps $0.20 a day when you know it's the same gas they had in the underground tanks yesterday when the gas was $0.20 cheaper.    It's 2012 people -- really -- no one can invent a fuel so that we can tell all the oil companies and OPEC countries to keep their oil?
Mar 16, 2012 1:17PM
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All our money going into gas and into commuting.

 

Before we had money to go out and eat or go and get a few nice things.

 

Now we pay $4.00 a Gal...  This has impacted in our pocket book.

 

We used to donate money to help the needy and to contribute to our comunity.

 

Now we have to watch every peny so that we can go to work and back...

 

We need a President that can help us get lower gas prices becuase all this high prices impact in our economy and retailers.

 

VR

 

PATHFINDER22554

Mar 16, 2012 12:55PM
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Canceled a trip to Disney because of gas prices and will do one we scheduled for the summer to the mountians. Have not taken a nice vacation in the past couple of years and when we schedule one, gas prices go UP. Prices go up have to cut back, since it seems everything else must go up each time on things we have to have. (Milk, bread eggs,,,etc.) Furthermore, thankful I do have a job, and this year they were talking of giving us a raise since we have not have one since 2008, but now that gas prices have increased that talk and idea has left and looks like yet another year with no increase in pay while everything esle goes up.

 

Also, watch the oil companies profits in April, for some reason they will show record profits...and dont be fooled, profits are what is left over after you have paid all your bills.....

Mar 16, 2012 12:12PM
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showme

 

The  gas prices will drive everything up doesn't any one else see that??? They should not be this high it is stupid when oil per barrel is not that high for the gas prices to be up this high,,,, just the speculators doing another number on us and still making bonuses and record profits for the OPEC boys.... When are we going to get this and stop it,  we the people have the power, just for one day do not buy GAS period.  It would blow make them take notice especially if we did the snub them....Think about it.

Mar 16, 2012 12:39PM
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BP was Obama's largest single contributor, They received favor throughout the gulf oil spill. They have received favor with the keystone pipeline rejection, as all that oil comes from private properties where they can not obtain leases or oil rights. Yet they are allowed to gouge the United States Public. Sounds like they'll be able to make another large contribution. The media keeps trying to paint a rosy economic picture in favor of their liberal controlled government. They will not criticize oil/ gas prices as they did under Bush. We have endured Higher prices throughout Obama's administration with little media support.Everthing We buy is about to go up in price. I hope for a change, enough hope and change
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Funny, when the price of fuel drops, the price of products don't. This won't stop till they have picked the carcass clean.
Mar 16, 2012 12:39PM
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thrid quarter last year exxon/mobil posted

 

"The retort came after Exxon Mobil, the world's largest publicly traded oil company, said it earned $10.7 billion in the first three months of 2011, up from $6.3 billion in the same period last year."

 

the prices have NOTHING to do with supply. All about greed ...

 

The above quote came from CNN money . com ..Just so you know its not me saying it...

Mar 16, 2012 12:44PM
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What amazes me is retailers always adjust up for gas prices, but never down as oil prices (and subsequently gas) fall.  This is a glaring example of the state of our country and how we as American citizens are being fleeced.
Mar 16, 2012 1:38PM
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Anyone remember 73 and 79...freeze pricing on fuel, stop fuel from being a commodity on the stock market....that is where the money is being made along with the greedy oil companies.
Mar 16, 2012 12:46PM
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Surprise, Surprise!!!  My husband has always said that gas prices WILL ALWAYS affect what people buy.  High gas prices will cause the average American person to stop buying what they really do NOT need.
Mar 16, 2012 1:31PM
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This is just crazy. Oil companies are just ripping everyone off and they just keep doing it. Crude oil price have been dropping but gas prices keep rising. You can go to gasprices.com and you can pull up a chart that has the gas prices and crude oil prices side by side and just see how the big oil companies are ripping everyone off. This problem will never get straightened out until the oil companies are broken up into pieces and they no longer have a monopoly.
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