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Retailers: Sales Down, Stocks Up--What's Going On?

CNBC.com

It is a tough time to be a retail executive but a good day to be a retail shareholder. While January sales were the weakest in 39 years, according to the International Council of Shopping Centers, retail shares rallied today.

Why? Some stores reaffirmed earnings (JCP, WMT , etc), and some investors decide to go bargain hunting. Sales results may not have bottomed but some investors believe we're close to a stock bottom in this beaten down category.

Today, meager sales were spread across luxury, department stores and the discounters. Now the pressure is on retail executives to manage inventory tightly (buy less, buy later from manufacturers), to merchandise just right (put things on shelves that will convince consumers to spend their budgeted cash) and, potentially, to restructure infrastructure.

Translation: making the hard decision to close stores and layoff workers (a la Macy's and Ann Taylor .) I imagine those sales associates working the floors on commission are seeing leaner earnings themselves.

The consumer is the first place an economic slowdown hits. January's sales results are proof of that. That said, the turnaround may not be upon us yet but it is coming. Analyst Dana Telsey of TAG forecasts that retailers can get ahold of inventory levels by the third quarter.

Questions? Comments? retaildetail@cnbc.com

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ANN
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JCP
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M
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WMT
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