If there is one lesson Jim Cramer has learned this time around in earnings season, it is that retail cannot be held hostage by the shopping mall.
This became blatantly obvious to Cramer when Michael Kors reported what looked like good numbers on the surface, but when he dug deeper, he realized weak department store traffic led to a negative quarter and weak forecast.
"The conference call took my breath away," the "Mad Money" host said.
Even the highest-end brand, Michael Kors, was not immune to the lack of traffic in the mall. And while it had very strong e-commerce numbers, it didn't have strong foot traffic. Retailers these days need to have the strength of both store traffic and e-commerce in order to survive.
Unfortunately, Target learned this the hard way last quarter when its e-commerce sales couldn't keep the stock from plummeting. The secular shift in how people are spending their money is now crushing the retail industry, Cramer said.
Newell Brands, which sells lots of products in stores like Target, also said the mall was a challenge.
"It has gotten to the point where even mentioning the mall on a conference call is the kiss of death. They are dying shrines to spending the old way," Cramer said.
Even when retail looks good, it is bad. Cramer thought Gap's same-store sales were getting better, but the stock market didn't even blink when the surface numbers appeared to be fine.
To really turn things around, companies must now get more inventive, like Hasbro. CEO Brian Goldner told Cramer on Monday that the company has strived to incorporate storytelling, experience and entertainment into its brand.
Clorox has also shifted aggressively to online advertising and sales as a concession that there is a drop in traffic in its regular outlets.
Unfortunately, Cramer said most suppliers haven't reinvented themselves, though. They haven't even tried to figure out how to sell online because they never thought the brick-and-mortar stores would let them down.
"Until they recognize the secular decline, they are doomed to have more numbers like Kors did today, and that makes the sector just plain uninvestible," Cramer said.
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