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Retailers: Will They "Love" December As Much As November?

November may have been sweeter to stores than many thought. Don't get me wrong--stores aren't going to be AHEAD of plan but it is sounding increasingly like they may NOT miss those meager plans they set for themselves at the beginning of the month. Meeting expectations COULD be a real positive for retail stocks tomorrow.

This sector needs it after being beaten down. There are a lot of doubters out there when it comes to where retail is headed this holiday and in the year ahead. Take a look at short interest: 7.2 percent of outstanding Abercrombie & Fitch shares are short, 13 percent at Urban Outfitters, 2.5 percent at Gap, 4 percent at AEO, Saks 11.42 percent, Macy's 3.3 percent, Wal-Mart 1.3 percent, Target 3.6 percent, Best Buy 14 percent, Circuit City 8 percent, Chico's 9 percent.

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From what I hear, some of those shorts will really be caught off guard. Sources telling me that Macy's will post double digit comps for the month of November while Anthrolopogie is rumored to be a real winner and I'm told that Abercrombie and Fitch had a fabulous Black Friday.

While the consumer is still under pressure and may be budgeting more than in years past, he/she is still spending. Shoppers may just be allocating those dollars differently. Discounters are forecasted to climb to the top of the heap (the fastest growing sector this month.) Department stores are also expected to ring up strong sales despite the weakness in certain apparel markets.

This is KEY. Why? November is the second most important month of the fourth quarter. Department stores and discounters ring up around 30 pertcent of their Q4 sales during this month.

What helped sales? Some say it is a calendar shift and others credit the cold weather. None of the fundamentals seem to have changed. The credit crisis is still overhanging things, gas prices are still high, the housing market is still weak, etc.

One hedge fund manager gave me a new way to look at the recent weakness in women's apparel. I think this is a factor that can be downplayed too often: the FASHION CYCLE. Women want to look more like their daughters these days than their mothers, hence the baby boomers are buying 'younger' fashions and taking their dollars away from the traditional 'missy' or women's retailers. Look for the fashion cycle to eat into the same store sales results at places like Talbot's and Chico's.

Here's the question though: Will Wall Street read a strong November as a positive for stocks or simply see it as the peak of spending, as retailers moderate their expectations for December?

Questions? Comments? retaildetail@cnbc.com

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