Citi's Kimberly Greenberger is looking for a turnaround in retail stocks sometime in the second half of next year. In the meantime, even the best of retailers are struggling.
"It's tough out there for every single retailer at every price point, and the only one that doesn't appear to be struggling is Walmart," she told CNBC. "We're really seeing discounting across the mall at every price tier, and we do think that retailers are having to fight for that customer dollar this year, harder than ever."
In terms of traffic, they may be winning the fight, but losing the war.
"We think that this Christmas will probably be a little bit better than people think from a sales perspective, but you have to remember the retailers are out there buying those sales," she said. "It's coming absolutely at the expense of profits; we think that the earnings numbers are going to be very, very disappointing."
So whose stocks are likeliest to rally when the market turns around?
Greenberger likes Coach, Gap Stores, Urban Outfitters, and Children's Place.
"We just upgraded Gap to a buy in late November," she said. "We do think that they're doing an amazing job at all three divisions of controlling inventory and cutting expenses, and they were really on this way before any retailer was."