GO
Loading...

Don’t Shop the Mall for Retail Stock Picks: Analysts

Thursday, 3 Jan 2013 | 6:03 PM ET
A shopper carries a bag from the Michigan Avenue shopping district in Chicago, Illinois.
Getty Images
A shopper carries a bag from the Michigan Avenue shopping district in Chicago, Illinois.

In a mixed holiday shopping season for retailers, the off-the-mall retailers fared better than those located at the mall, said analysts.

"It was very disappointing month for most of the mall-based retailers — traffic really challenging, people shopping online," Brian Tunick, JPMorgan retail analyst, told CNBC's "Squawk on the Street" on Thursday.

Tunick predicted that as more people shop online and visit outlet stores, the third and fourth tier malls could be forced to close down. "The A and B-plus volume malls are where the action is," Tunick said. He predicted at least 300 mall closings over the next five to 10 years if e-commerce and mobile commerce ultimately becomes 20 or 25 percent of retail sales.

Mixed Bag For Retail Sector
Edward Yruma, KeyBanc Capital Markets analyst; and Brian Tunick, JPMorgan analyst, discuss the winners and losers of retail now.

Echoing Tunick's comments, Edward Yruma, an analyst at KeyBanc Capital Markets, said that online has become much more important to a number of retailers but "some haven't made the critical investments necessary to drive those businesses."

The off-the-mall retailers fared much better in December, with Tunick citing good sales trends at off-priced retailers Ross Stores and TJX and Gap's Old Navy.

His favorite idea for year is Urban Outfitters, another off-the-mall retailer. "The Urban Outfitters and Anthropologie concepts are really driving strong traffic," he said.

Yruma likes department store Nordstrom, which did well in a challenging December. "One thing with Nordstrom, it has a very high penetration in California and California seems to be getting better," the analyst said. The retailer, which caters to higher end consumers, also focuses on turning inventory quickly to keep shoppers coming back.

Additional News: Retail Sales Reports Reveal Winners and Losers

Additional Views: Fast Money Trades in Gap

Disclosures: JPMorgan has received compensation in the last 12 months for products and services other than investment banking from URBN, TIF, GPS, TJX, ROST, KORS, LTD, ANF, ARO, CHS. JWN is an investment banking client of KeyBanc.

Disclaimer

  Price   Change %Change
ROST
---
TJX
---
GPS
---
URBN
---
JWN
---

Featured