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Retail Stocks Show Strength Outside of Luxury

On a day Tiffany shares plummeted more than 10 percent, the “Fast Money” pros saw bright spots away from ultra-luxury names.

Retail expert Patty Edwards of Trutina Financial liked Lululemon Athletica.

“When you look at LULU, it’d almost been left for dead by a lot of folks,” she said Tuesday. “There is a growth story there, and I think you have to look at the actual underlying fundamentals of each individual retailer.”

Edwards was skeptical of luxury retailer Tiffany after it revised its guidance downward for 2012.

“I’m not shocked,” she said, adding that bridge brands such as Coach could face headwinds. “That is more of an aspirational brand with a lot of international exposure.”

A day ago, “Fast Money” technical analyst Abigail Doolittle said Tiffany share prices were trading in “a bearish wedge pattern,” while Coach was also vulnerable.

Tiffany closed at $59.94; Coach shares were down 0.86 percent at $62.32. Liz Claiborne dropped 13 percent to close at $8.64.

Citigroup retail analyst Deborah Weinswig, who doesn’t formally rate Tiffany stock, said luxury retail sales could slow as consumers shift from high-end shops to department stores.

“We have definitely adjusted our numbers for 2012 as we have increased skepticism on what we’re going to see out of the European tourist,” she said. She added that retailers have so far reported strong sales from foreign shoppers.

Weinswig picked Nordstrom to perform with a “buy” rating.

“They don’t discount. their Internet sales have been unstoppable,” she said. “They’re starting to do same-day delivery. They are probably the furthest ahead in their tech spending, and for the year they’re on track to basically deliver a 7.3 percent comp.”

Weinswig also held a “buy” rating on Saks.

“We feel they’ve made big steps ahead on the luxury side, especially in fine jewelry,” she said.

Patty Edwards agreed with Weinswig on Nordstrom.

“I like the fact that it is simply a U.S. name,” she said.

Trader Zack Karabell was keeping his long Tiffany calls.

“It’s likely to be a company-specific issue, a lot of it was whether or not people shopped there, in New York, over Christmas,” he said. “Unless you see this confirmed from the rest of the space — from Coach, from Lauren, all the other names we’ve said — you really have to leave it as a company-specific issue. It could also be quite transitory.”

Trader Joe Terranova liked PVH, formerly Phillips-Van Heusen.

“U.S.-centric theme,” he said. “I think that’s the play in the high-end retail space.”

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Trader disclosure: On Jan. 10, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova owns APC; Terranova owns OXY; Terranova owns XOM; Terranova owns VRTS; Terranova owns IBM; Terranova owns CSCO; Terranova owns AXP; Terranova owns SBUX; Terranova owns CSX; Terranova owns SWN; Terranova owns AXP; Karabell is long AAPL; Karabell is long XLF; Karabell is long IBM; Rivertwice is short AA; Karabell is long FCX; Karabell is long calls GOOG; Karabell is long calls AMZN; Cortes is long SO; Cortes is long XLU; Cortes is short Corn; Cortes is short Wheat; Cortes is short Crude; Cortes is short XRT; Cortes is short IYT vs. S&P long; Cortes is short QQQ;

Zachary Karabell
Rivertwice has short puts GS;

Patty Edwards
Trutina Financial is long QCOM

Trutina Financial is long INTC

Trutina Financial is long GLD

Trutina Financial is long PGM

Trutina Financial is long AA

Trutina Financial is long YUM

Trutina Financial is long MCD

Trutina Financial is long BMY

Trutina Financial is long JNJ

Trutina Financial is long AMZN

Trutina Financial is long AAPL

Trutina Financial is long GWW

Michael Pachter
No disclosures

Dan Dicker
Dicker is long oil futures and short call options

Dr. Anthony (Tony) Coles
No disclosures

Mike Vorhaus
No disclosures

George Davis
No disclosures

Deborah Weinswig
Gregory Hertz, CFA, CPA, Associate, holds a long position in the securities of Wal-Mart Stores Inc.

Leo Kulp, CFA, Analyst, holds a long position in the securities of Wal-Mart Stores Inc.

Citigroup Global Markets Inc. or its affiliates beneficially owns 1% or more of any class of common equity securities of JC Penney Co Inc. This position reflects information available as of the prior business day.

Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of Dollar General Corp., Wal-Mart Stores Inc.

Citigroup Global Markets Inc. or its affiliates has received compensation for investment banking services provided within the past 12 months from Dollar General Corp., Kroger Co, Wal-Mart Stores Inc.

Citigroup Global Markets Inc. or its affiliates expects to receive or intends to seek, within the next three months, compensation for investment banking services from Wal-Mart Stores Inc.

Citigroup Global Markets Inc. or an affiliate received compensation for products and services other than investment banking services from CVS Caremark Corp, Dollar General Corp., JC Penney Co Inc, Kohl's Corp, Kroger Co, Safeway Inc, SUPERVALU INC, Walgreen Co, Wal-Mart Stores Inc, Costco Wholesale Corp in the past 12 months.

Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as investment banking client(s): Dollar General Corp., Kroger Co, Wal-Mart Stores Inc.

Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, securities-related: CVS Caremark Corp, Dollar General Corp., JC Penney Co Inc, Kohl's Corp, Kroger Co, Safeway Inc, Saks Inc, SUPERVALU INC, Walgreen Co, Wal-Mart Stores Inc, Costco Wholesale Corp.

Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, non-securities-related: CVS Caremark Corp, Dollar General Corp., JC Penney Co Inc, Kohl's Corp, Kroger Co, Safeway Inc, SUPERVALU INC, Walgreen Co, Wal-Mart Stores Inc, Costco Wholesale Corp.

Citigroup Global Markets Inc. or an affiliate received compensation in the past 12 months from Dollar General Corp..

Analysts' compensation is determined based upon activities and services intended to benefit the investor clients of Citigroup Global Markets Inc. and its affiliates ("the Firm"). Like all Firm employees, analysts receive compensation that is impacted by overall firm profitability which includes investment banking revenues.

The Firm is a market maker in the publicly traded equity securities of CVS Caremark Corp, Costco Wholesale Corp.

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COH
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JWN
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LULU
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PVH
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RL
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SKS
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TIF
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