Shares of Children's Place soared over 18 percent last Wednesday in response to the company's fiscal fourth-quarter earnings report, which beat estimates on all fronts and saw an almost 7 percent bump in same-store sales. The company also gave encouraging full-year guidance that was above expectations.
"While their competitors struggle, these guys are rolling out hot products and taking market share left and right," Cramer said. "At the same time, the new order planning and forecasting tools that Elfers has adopted allows the company to keep its inventories lean, meaning they're no longer getting stock with lots of excess merchandise which they then need to discount like crazy."
The company's partnership with Amazon has also helped grow its e-commerce business "like a weed," while a unique target demographic has allowed its more successful brick-and-mortar stores to stay afloat thanks to parents who find in-person shopping the easiest for their growing kids, Cramer said.
Cramer's other retail pick, Foot Locker, is also benefiting from the kids' market. Its best growth last quarter came from its Kids Foot Locker chain, with adult sneaker and basketball businesses trailing not far behind.
Cramer noted that Foot Locker is also expanding its Europe business and successfully breaking into sports apparel, both of which are paying off for the retailer. Not to mention its digital business is up almost 20 percent in the United States, Cramer added.
So what sets these two retailers apart? First, their long-term strategies are paying off thanks to management teams "laser focused on executing," Cramer said.
Next, Cramer said both have done well in selling high-quality products, overseas expansion, and pushing into more niche categories, like Children's Place adding size 16 to their shelves and Foot Locker's exclusive partnerships with Nike.
Cramer's bottom line: "They've got the secret sauce here, their stocks aren't even particularly expensive, and they're terrific places to go if stocks get clipped after the Fed raises rates later this week."
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