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This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.
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Find me an analyst or an investor who's excited about this week's same store sales results. Literally, the expectations are so low for this first month of the first quarter, that any indication of a rosier March may cause volatility around share prices when the nation's biggest stores report same store sales results for the month of February on this Thursday.
Cowen's analyst Lauren Levitan says that 'business trends in Feb. did not show any meaningful improvement following lackluster sales in the last couple of months." (FYI - Levitan has an outperform on AEO, ANN, BEBE, BBBY, LTD, MW, TIF, WSM, ULTA, URBN and sees the biggest downside risk to her Q1 EPS estimates for AEO, ANN, CHS, MW, NWY, and PSUN.)
Another naysayer: Goldman Sachs expects results to be lower than Wall Street is currently expecting with Wal-Mart [WMT
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] and Costco [COST
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]presenting the only healthy performance exceptions.
Thomson Financial is expecting that this month will be the weakest February since 2003. Why? According to Citi analyst Deb Weinswig (who's neutral on broadline retail right now): the reasons are lack of fashion newness, high food inflation and fuel prices (gasoline hit a national average of $3.16 a gallon last week--not far from its record high), and the housing slowdown is draining savings and retailers face tough same store sales comparisons to last year.
The ICSC also points out that it was also the fourth snowiest week in 16 years with heaviest fall in Upper Midwest and Northeast. (FYI--Weinswig favors SKS and WMT as top picks.)
What I'm looking for this Thursday are signs of retailers getting a foothold on a bottom (or at least a patch of dry land for a moment!) Short interest in retail broadlines and home improvement sectors decreased (-4.5 percent) by mid February: that could be a sign that the market thinks these retail names can't go too much farther south.
As J Crew's CEO Mickey Drexler was quoted as saying a few months ago, "it is shakeout time" for retailers. Who can make more and sell more at a time when consumers are having a problem finding funds to spend?
What's your retail report card? Which executives are running their inventories and stores well right now?
Questions? Comments?
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Data is a real-time snapshot *Data is delayed at least 15 minutes