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Retail's problem isn't tightfisted shoppers

New 52-week lows popped up everywhere in retailers today, from department stores like Nordstrom, Kohl's and Macy's to the discounters like Wal-Mart and Dollar General to apparel chains like Urban Outfitters and Gap.

Retailers are getting clobbered today, but don't miss the key story: consumers are buying, they're just not buying at department stores and some apparel places.

This was glaringly obvious in the October retail sales report. Sales were up 1.7%, year-over-year. But there was a wide difference in where people put their money:

October retail sales (YOY)
Online up 7.1%
Auto dealers up 6.7%
Restaurants/bars up 5.5%
Furniture up 5.2%
Health/personal care up 4.6%
Building materials up 4.3%
Department stores up 0.5%

So, people are shopping more online. They're buying more cars. They're drinking and eating out more. They're buying furniture. They're buying makeup and beauty products (look at Ulta Salon, up 22% this year). They're buying stuff at Home Depot and Lowe's to improve their homes.

And department stores? Up 0.5%. Nothing.

One problem is that some of the hottest retailers — fast fashion — are not represented in the U.S. stock market. Forever 21 is private. Zara, part of Inditex, trades in Europe. Uniqlo trades in Tokyo. And the hottest fast fashion store of all — Primark — is only open in Boston and Philadelphia, with many more coming next year. Their parent, Associated British Foods, trades in London.

How bad is retail? The Street is essentially throwing in the towel on the department stores.

Look at JC Penney. By any standard, its earnings report was good: A smaller loss than expected, and it is regaining market share.

And its reward? Down 15 percent on titanic volume. I'm talking eight times normal volume.

THAT is throwing in the towel.

Why throw in the towel on a good report? Because no one cares. No one believes the department store story any more. The whole paradigm is breaking down. They've had no profits since the fourth quarter of 2011, maybe they will this quarter, maybe not, but who cares?

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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