Buyer's Remorse Over Paying Retail
Producer, CNBC’s "Fast Money"
There's nothing like buyer's remorse when it comes to stocks.
Retail stocks appeared to be a screaming "Buy" leading up to the holiday shopping season—but now analysts are downgrading some of the best-known names.
"There are unknowns regarding cotton costs and labor costs, and on the food/mass [production]/drug side, there's a threat coming from three dollar per gallon gas. With these in place, how could anybody get cozy with rosy," said Richard Hastings, Global Hunter Securities Macro and Consumer Strategist.
Yesterday, Jefferies downgraded Ann Taylor, Coach, Tiffany and Urban Outfitters.
Last month, Wall Street Strategies cut its ratings on Coach, Urban Outfitters and Pacific Sunwear. But, the firm upgraded Target to a "Buy" from "Hold."
So it can't be all bad, right?
Retailers selling quality items at bargain basement prices seem to be getting the upper hand. Dollar General announced Monday it plans to open 625 new stores in 35 states and create more than 6,000 new jobs this year.
Hastings said, "We should not be amazed or confused by the Dollar General announcement regarding store openings. They have so many real estate opportunities with very low per square foot rents — and the boxes are low cost to operate anyway, so why not go after more Wal-Mart marginal sales while commercial real estate provides so many cheap rents."
And that's evidence this could be a sign of the times.
"I think there is a widening of the 'haves' and 'have-nots' in a financial sense... We still have very high unemployment. So, I see distinct and long lasting consumer behavior at the lower end of the mid-tier and lower end," said Leah Hartman, retail analyst at CRT Capital Group.
Many of the nation's major retailers have the hard financial numbers from the holiday shopping season sewn up.
Those key results will break during "Squawk Box" on Thursday.
Stephanie is Squawk Box producer and senior NetNet retail correspondent. Follow her on Twitter @StephLandsman
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