With same-store sales numbers hitting the Street on Thursday, is there fast money to be made in retail?
Although May ushered in warmer weather and all the related purchasing that goes with it, most U.S. retailers are expected to post declines in same-store sales with department stores and specialty chains getting hit the worst.
Retailers catering to higher-end shoppers face the most pressure. Department stores are all expected to post lower same-store sales, with the steepest drop at Saks .
In the teen category, chains that promoted basics and offers such as "buy one, get one free" are likely to post the stronger results. The Buckle and Aeropostale should post double-digit jumps in same-store sales while Abercrombie & Fitch, which was late to the discount game, is expected to post a 24.6 percent decline. "We've seen Abercrombie take a more aggressive promotional cadence in order to stop the bleeding, if you will," says Lazard analyst Todd Slater.
Meanwhile, several analysts expect continued improvement from The Gap’s lower-priced Old Navy chain, which has sold items such as $1 flip-flops and $3 T-shirts. However, Gap's overall same-store sales are expected to decline.
At lower-priced outlets such as TJ Maxx same-store sales are expected to rise even more than they did a year earlier.
However chains that sell gasoline along with discounted items, such as Costco and BJ's , face fuel prices lower than a year earlier, and that could drag down their sales.
And then there’s Wal-Mart. The world's largest retailer, has been one of the best-performing retailers in the recession. But as you might remember Wal-Mart stopped reporting monthly sales data with April's results, instead providing those number quarterly when they report earnings.
What’s the bottom line?
It all comes down to the retailers that can go out and do things that get the customers in, says Patricia Edwards of Storehouse Partners. But they have to do it with a value proposition. If they can’t do that, they’re in trouble.
As a result, Edwards tells us she really likes Nordstrom and The Buckle. Both retailers give shoppers the feeling they're getting quality at a competitive price.
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Trader disclosure: On June 3rd, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (TTM), (AAPL), (BAC), (BBY), (FCX), (EEM), (PBR), (NOK), (MGM); Seymour Is Short (VALE); Seymour's Firm Is Short (VALE); Grasso Owns (V), (AMZN), (WMT), (RIMM); Grasso's Clients Own (ARO), (V), (OXY), (PBR), (WMT), (RIMM), (ARO); Najarian Owns (CELG); Najarian Owns (AMAT) Calls; Najarian Owns (BX) Calls; Najarian Owns (FCX) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (MOS); Najarian Owns (WNR) Calls; Najarian Owns (XHB) Call Spread
For Patricia Edwards
Edwards Owns (WMT); Edwards Owns (COST)