It's time to take advantage of the panic in the retail sector.
There's no shortage of earnings warnings — and inventory — at retailers heading into third-quarter retail earnings season.
John Taggert | Bloomberg | Getty Images
Sale signs are displayed as a shopper exits a store on 34th Street in New York.
Wal-Mart fired an early warning shot, reducing earnings estimates due to increased costs. Turns out wage hikes will not translate into consumers spending more in stores. In addition, Amazon is forcing Wal-Mart and countless other retailers that have fallen behind in omnichannel investment to spend shareholder money in a desperate attempt to play catch up.
Meanwhile, Skechers recently warned that department stores are stuffed with inventory like a Thanksgiving turkey. Throw in Michael Kors lowering sales guidance and the brand's intention to pull back from the department-store channel as a result of too many promotions, and we have a perfect storm going into department-store earnings.
While I am sounding like the Grinch, let me point out the silver lining in a sea of bad news: Not all department stores are created equal. It's a good time to make your selective retail shopping list.
At the top of my stocking-stuffer list is Nordstrom. Here is a company where "BOGO" applies — that's "buy one, get one" — by combining the high growth-of-price concept and luxury. Plus, the retailer's stock is down 19 percent year-to-date.
While many department-store stocks fall into the Wal-Mart category of spend, spend, spend ahead (yes you, Kohl's) Nordstrom has already taken its dose of investing in e-commerce medicine.
More importantly, Nordstrom is one of the few forward-thinking retailers partnering with new guard brands and ideas (Topshop, SJP by Sarah Jessica Parker, and Pop-In stores).
Finally, management has recognized the need to adjust to the promotional environment and match the competition's traffic-driving events. As a result, comps for the full-line department store have been positive for the past three quarters.
I expect a sigh-of-relief rally when the company reports earnings on Thursday. After all, Nordstrom is no Kohl's and the Street should not put these two retailers in the same stocking.
Commentary by Stacey Widlitz, the president and founder of SW Retail Advisors, a global retail-market-intelligence firm based in London and NYC. Previously, Widlitz was a senior sell-side analyst for 10+ years. Follow her on Twitter@StaceyRetail.
