After sifting through results from three popular retailers, Jim Cramer thinks the takeaway for investors is clear.
"It appears things are spotty. Therefore, I wouldn't play with the sector broadly. Instead, I'd only go with the single stocks of retailers who are executing superbly."
Cramer drew the conclusion after reviewing earnings from The Container Store, Lumber Liquidators, and Tractor Supply, all of which underwhelmed the Street.
And out of all the disappointing information contained in the reports, Cramer was particularly rankled by commentary from The Container Store, which said weakness reflected a "retail funk." (Although they didn't use the term "funk" both Lumber Liquidator and Tractor Supply made similar statements; that is, they implied their weakness was also due to a kind of malaise among consumers.)
The "Mad Money" host doesn't buy it.
"Shoppers of Williams Sonoma didn't experience a funk after the winter weather cleared, or before the weather cleared, for that matter. The shoppers at Restoration Hardware spent like mad before during and after the tough winter. They were not in a funk. Same with Burberry, which reported superb numbers," Cramer said.
Strength reported by these other retailers suggests to Cramer that the "retail funk" is more of an excuse than anything else. Rather than blame something non-quantifiable, Cramer thinks The Container Store, Lumber Liquidtaors and Tractor Supply all need to execute better.
"And I also think the weakness speaks to the inability of single-purpose retailers to deliver strong numbers with great regularity."
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As noted above, Cramer believes the message for investors is clear; approach the sector with great caution.
Although he thinks there are ways to make money in the space, Cramer says focus on single stock stories rather than broad bets via a Retail ETF such as the XRT. "And in no case, should you pick the stocks of companies who blame the weather or their customers for weakness. Those retailers are fine to shop at, but they're not good to own."
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