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Predictably Horrible September Retail Sales


September was a tough month in the retail sector... is it holiday season yet?


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Abercrombie and Fitch (ANF):

A man's gotta know his limitations and I know this: I feel older than Clint Eastwood whenever I get within 20 yards of the velvet ropes and shutters ANF puts outside the stores. The catalogues might as well be called Boy Band Impresario Illustrated.

You can't trade Hope, Spite or Yuck. Despite the sales miss ANF's balance sheet looks like a group of sinewy, hairless teens capering through a cool, frothy surf…

Let's just move along.

American Eagle Outfitters (AEO), Limited (LTD), Ann Taylor (ANN), The Gap (GPS):

The theme of the month is Buy the Blah, nothing creepy here, just a bunch of over-shorted stocks rallying after reporting rather dismal sales, generally lowering outlooks and saying nothing particularly good. This is the problem trying to crowd into "the Consumer is Dead" trades. You can be right and still lose money on the position. Most of these stocks have been on brutal slides since Spring and everybody on earth was expecting weak results.

You may not want to park your money on these specialty names for the long term but discretion is the better part of valor as far as betting on the short side, in my opinion.

BJ's Wholesale (BJS) & Costco (COST):

Uppin' the Clubs! Both of the Big Public Club Stores turned in strong performances for the month. In sharp contrast to ANF, BJ's and CostCo are the kind of Clubbing I like to do with my retail shopping and investing dollar. After a long turnaround and a fistful of management woes BJs has earned a place back on the retail radar with this performance.

Children's Place (PLCE), Gymboree (GYMB) and the miraculous recuperative powers of Youth:

Children's Place is a mess and Gymboree doesn't break out monthly sales anymore (which is always a red flag). So why mention either? Because both stocks are higher today after PLCE cleared the deck on Monday night and Gymboree nudged quarterly sales estimates to the mid-single digits.

As we discussed in the Buzz on Tuesday morning, Children's Place has dumped truly impressive amount of dismal news on the tape over the last few weeks and months. The stock fully reflects that bad news. Beyond announcing lead-paint related recalls on little boy golf shirts, it's going to be hard for PLCE to do anything terrible enough to get the bears paid in the near term.

Macy's (M), Nordstrom (JWN) & Saks (SKS): The Department of Headline Horrors. My name is Jeffmacke and I'm long Nordstrom. JWN was the worst of the group this month and one of the worst releases in all of retail. I'd like to be optimistic about the outlook but, honestly, I can't find a lot to cling to on the positive side for JWN.

Both Macy's and Saks look like better plays here, particularly Macy's which seems to have a decent bottom near the $30 level.

Come on and Zoom, Zoom Zooma Zumiez (ZUMZ):

You might wonder why anyone bothers to invest in specialty when it always seems to end poorly. For the doubters I offer the year-to-date performance of Zumiez. They've got the worst consumer name this side of Chipotle (CMG), in terms of being able to say it aloud, but the charts of both scream Buy.
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Position in JWN

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