The repercussions of the dramatic decline in department stores have reverberated deeply into the retail sector, and Jim Cramer says this cannot be dismissed as a one-time-only incident.
"The implications here are horrendous for a host of different companies," the "Mad Money" host said.
Perfume and make-up have stood strong as the best segments for stores like Macy's. When Cramer listened to the conference call for Estee Lauder, he realized the struggles of the department store have cut into the company's growth.
The conference call made Cramer want to recommend Ulta Beauty, which was cited by Estee Lauder as one of its best venues. However, he couldn't ignore that department stores were mentioned repeatedly as a source of weakness for Estee Lauder.
North Face is a department-store brand that Cramer attributed as the chief reason for VF Corp's tumble. PVH has been hurt from Tommy Hilfiger and Calvin Klein's holiday sales, while Newell Brands cited declining mall traffic as the reason for moderate sales growth.
Hasbro seemed to be the only company that could fight the trend.
"I'm not even talking about the possibility of a border tax that would bang all of the retailers as they are all huge importers," Cramer said.
The one shining star in retail right now for Cramer is the desire of Hudson's Bay to acquire Macy's. It wasn't the department store sales that caught his attention; it was the value of the amount of real estate that Macy's owns.
Cramer suspects Hudson's sees Macy's as a real estate play that can be developed easily because it has other stores that it can shift business to.
"Selling itself to Hudson's Bay may be the only way out given the secular nature of the decline, and the fact that a quick turn in the company's fortunes seems highly unlikely," Cramer said.
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