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The Real Deal on Retail: Abercrombie, Costco, Macy's...


Digging into June's Same Store Sales, Minyanville style!

Click here to see the Same Store Sales for the companies mentioned below and more!

1).xls">For the SSS numbers, click here.

Abercrombie & Fitch (ANF):

ANF beat estimates for the first time in ages and the shorts are paying the price, with the stock up strong early.

Looking for reasons for the beat and reaction? A couple spring to mind. First, the chain has been on the shnide for ages as ANF continues to digest the torrid streak of SSS beats that ended last year. Traders love to play a trend and shorts have been going slowly loony over the idea of taking dark-side shots at ANF, especially after the stock rolled over 15-points going into today's release.

I always say that "Specialty is where Love goes to die." The rule works both ways; those who Love in the conventional "buy the stock and never, ever sell" and the darker form of Love, generally expressed with phrases like "short this pig to zero" and "if I can't have her then NO ONE can!" You can trade names like ANF long or short; you just have to be very quick.

The second reason Abercrombie analysts may be off a tick of late is the new store model. For those who haven't seen it, ANF has taken its "Hip club, velvet rope" approach to retail to new extremes in recent months. The company has put shutters on the store windows(?) and posted great looking teens right at the front door. You know the legendary "look people in the eye and smile?" greeters at Wal-Mart (WMT)? ANF's greeters look vaguely in your direction with Derek Zoolander's Blue Steel and dare you to come into their store.

I could tell you more but I start to shake and cough like Humbert Humbert at the very idea of shopping in ANF at this point in my life.

Take Away: I'm not interested in the stock, long or short… but I really, really wouldn't want to be shorting the stock into today's move.

Children's Place (PLCE):

The kids have officially stopped being alright. Gymboree (GYMB) no longer reports SSS on a monthly basis and Children's Place has become the gang that can't shoot straight and the stock that can't go higher.

Take Away: I might be more interested in the space as we near the back to (pre) school season and we hear from Gymboree.

Costco (COST):

Seems like everyone is officially on-board with the idea that these guys are going to do work, both as a company and a stock idea. I want to be long but I want to buy with a 5-handle. I'm probably being too cute on an entry point but my feelings about taking new retail positions in retail during the summer is well established.

Two selling points for Cost that haven't been over-reported (yet): 1. The Supreme Court's idiotic decision allowing vendors to set minimum prices actually helps chains like Costco, who now have a contractual floor for where they can sell big-ticket items like electronics. 2. Sticking with electronics, Best Buy (BBY) and Circuit City (CC) have reported dramatic declines in the rate at which customers are buying warranties. This suggests both more rational customers (warranties are a rip-off) and that customers will buy on the basis of ease of shopping, rather than add-ons.

Take Away: I'm watching Costco like a dog standing at the end of a dock, staring intently at a floating tennis ball.

Kohls (KSS):

My single New Year's Resolution ("I will ignore talk of a Kohl's turnaround") is starting to feel better.

Macy's (M):

I shopped Macy's (formerly Marshall Field's, formerly Daytons) while back in the Minnesota homeland for the 4th. In all honestly, the stores looked just great which leaves me inclined to not make too much of the June data point.

Take Away: Regardless of the look of the stores, and despite the fact that I've learned not to pooh-pooh buyout stories just because they don't make sense to me, personally (see: Hilton (HLT) at $47), if I owned Macy's at $40 because I believed the LBO rumors, I'd be a seller today.

Nordstrom (JWN):

Marking 12-straight months of SSS beats but the stock is looking pretty punk.

Take Away: I'm still long the "investment" portion of my JWN long, having sold some for a trade earlier this year. I'm sticking with it for now but the drum-beat of second-guessing myself on staying long here is picking up steam.

Gap (GPS):

Memo to GPS: You guys are sure you don't need a CEO, huh? Because, from where I'm sitting, it, uh, looks like you keep managing to miss your sales targets and your stock should (and would) be trading around $12, if not for the M&A rumors.

Saks (SKS):

A lousy number more or less pre-announced last month, when SKS pulled promotions forward into May. That said, the stock is moving higher today, regardless.

Take Away: "Good Price Action on Bad News" is fighting with "Be Disciplined" in my head as I look to take a long shot at Saks in the teens.

Wal-Mart (WMT):

After years of taking a beating from Target (TGT) on the performance front, Wal-Mart has been given a gift by Sears (SHLD). Finally, there's a big name discount-type chain performing demonstrably worse and making even lamer excuses for it than Wal-Mart.

Take Away: Wal-Mart may be showing signs of life and Sears, as a retailer if not a stock, is deader than Francisco Franco.
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Position in JWN.

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