Retailers reported dismal sales figures for December on Thursday.
The data confirmed fears that the holiday season was the weakest in decades, and deep discounts spurred a number of merchants to cut their earnings outlooks Thursday, fueling more concerns about the health of the industry.
The Retail Trade
Among the many retailers posting steep declines, the biggest surprise came from Wal-Mart , which posted a smaller sales gain than what Wall Street expected and cut its fourth-quarter earnings outlook.
"Wal-mart customers are being massacred by this economy!" exclaims Howard Davidowitz on the Fast Money Final Call . "Who's the customer with the adjustable rate mortgage? It's the Wal-Mart customer."
About 50% of Wal-Mart merchandise is discretionary. And Davidowitz doesn't think Wal-Mart shoppers will open their wallets for things ranging from TV's to T-shirts. "And that's why I like Dollar Tree, he says. "They don't carry apparel at all." For a trade he recommends a long position.
"There's definitely a consumer retrenchment that's happened a lot more quickly than people think," observes Zach Karabell. "However I don't think investors will get hurt in Wal-Mart, but no place in this space is particularly high beta."