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Cramer finds the silver lining in retail's disappointing earnings reports

With another round of retailers gearing up to release earnings, Jim Cramer looked back at some of the sector's latest reports to see if they are really as bleak as their stock movements suggest.

"If you take a second look at the crucial reports from Macy's, Kohl's, Nordstrom [and JC] Penney, you find things that you can like about these, even as none of them truly stands out as must-own stocks," the "Mad Money" host said, turning to Macy's first to prove his point.

Though the market responded accordingly to Macy's big earnings miss, sending the stock down to six-year lows after the department store chain reported a whopping 4.6 percent drop in same-store sales, Cramer said the 6.4 percent yield could be a safety net for investors while Macy's shutters its less profitable stores.

Cramer said that the stock might not have gone down so much if there was not so much idle buzz about a possible takeover. And, he added, Macy's still has some real estate value left despite moving too slowly to monetize it.

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"Management seems to have an awareness of what they can do to raise their numbers: give clear value, exclusivity and simplicity," Cramer said. "Shoes have become a winner and they're still doing well at fine jewelry. Makeup's doing well. It's not a total debacle, although I could argue Macy's is the weakest of the four."

Kohl's, on the other hand, has a number of tailwinds behind it, with a strong balance sheet, a safe 6 percent yield, and an aggressive buyback initiative that took Kohl's share count from 270 million to 170 million over the last five years, the "Mad Money" host said.

"Kohl's has the most optionality here. It also has stores in strip malls, which makes it easier for the company to leverage an 'order online, pick up at the store' strategy," Cramer said.

Kohl's stock also got a boost in February that lasted until April thanks to the launch of Under Armour goods in its stores, a promising sign for any other name brands the company is considering selling.

"I also like its personalized pricing initiative and its loyalty program, with 30 million members," Cramer added. "There's a lot Kohl's can do with machine learning if it can harness that base to figure out what its customers want. In short, it is the best of the four."

Nordstrom's report was the most confusing of the four. While the retailer insisted that all of its flagship locations were in good standing, their same-store sales still declined 6.4 percent.

"The fact that that the whole chain comped at minus 0.8 percent and that it did, indeed, have an upside surprise, was completely ignored, in part because Nordstrom itself seemed so confused about what to do with a slower online business and a discount business that seems stalled," Cramer said.

As the store chain tried to fix that slowdown, Cramer found it stopped focusing on its legendary service, which he felt the company could have leveraged more intensely.

And with Nordstrom's stock trading at 13 times earnings and only offering a 3.5 percent yield, it is an expensive buy compared to fellow straggler Macy's and to the more upbeat Kohl's, he said.

Cramer thinks JC Penney is the most interesting because, like Kohl's, its struggling stock could start to see an uptick thanks to some beneficial tailwinds.

JC Penney's appliance business saw good sales in the mattress and furniture areas, and the company is capitalizing on its popular Sephora and salon businesses nationwide.

"Penney, like Kohl's had positive progression through the quarter. However, CEO Marvin Ellison started his conference call by saying that the chain had 'disappointing top-line results,' which turned everyone off," Cramer said.

With Home Depot and Target set to report this week, Cramer is eager to see what's in store for the next wave of retailers.

The growth of Amazon inevitably poses a challenge to Home Depot's business, but as one of the "least Amazon-able of all retailers," Cramer predicts its numbers will be strong, especially as many of its suppliers have reported strong earnings.

"We don't know about Target, although e.l.f. makeup business seems to have stumbled in April, and they're a big, big supplier to Target," the "Mad Money" host said. "However, it's worth wondering if some of these retailers aren't oversold. I wouldn't be surprised if Kohl's couldn't rally if the temperament of the group gets more positive this week after a potential win from either Home Depot or Target."

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