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business newsShould You Buy Retail (Stocks)?
Our own Jeff Macke looks at twelve of the sector's biggest names.
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Why? Because that’s the way my dad taught me and his dad taught him. Properly taught, it’s also a way to imbue a youngster with a rudimentary MBA. Nothing operates in a vacuum. Shoddy workmanship in the factory, delayed shipment to the stores, lousy and late transition from the shipping dock to the shelves; if these steps aren’t operating with military precision sales are being missed.
I don’t give a fig if we’re in a bubble or a depression, missed sales says “Lousy Merchant” louder than a 10’ neon sign. In an industry where good players net from 5-10%, and most players struggle to break even, zero tolerance is the only acceptable way to run a store if you want to avoid the specter of Ken Macke paying you a midnight visit. I loved the guy, he loved me, and I can’t think of a living person with whom I’m afraid to argue. But the prospect of Ken mixing anger with disappointment in reviewing my performance gives me goose pimples nearly 3 years since the man uttered a coherent word.
He was just one of those guys.
So I watch the stores by habit, and regardless of the economy. Data is for propeller-heads. Walking a store tells you all you need to know about the mindset of America. Being the best consumers on earth may be less than fiscally responsible but, for the smart shopper, a Saturday in the mall gives you most of the next week in terms of investment ideas.
April had Easter, mushy comps from last year and low expectations. Let’s which merchants won and who should be on the look-out for a visit from the ghost of the only man who could make me cry with a fixed glare (though only until I was 11 and after I was 35; so I had a good tearless run of almost a quarter century).
But we’ll leave all that for my shrink. For now, let’s whip through our sampling of retailers and see how they did both individually and collectively when compared to a bar set lower than a grounded broomstick.
Abercrombie & Fitch (ANF): The mighty, hairless, goose-fleshed teens capering through the surf wearing clothes almost impossible to find have fallen hard. -22% for ANF? It’s like watching footage of Ali fighting Trevor Berbick. Don’t you dare count coming in 5% higher than the –27.8% estimate as a “beat”. It’s a disgrace and anyone who didn’t feel cool enough to enter the dance clubs that have become ANF stores is quite alright with seeing the cool kids get smacked around a little bit.
Aeropostale (ARO):
Why do we bother with once fallen specialty? Check ARO’s YTD returns. 116% gains and no velvet ropes out front. Coincidence? Not from where my mass-merchant-raised arse is sitting.
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