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Retailers on Thin Ice

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How can you play a flagging consumer? Stick to the makers of the hottest segments, not the companies who sell them.

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Greetings from the NASDAQ Marketsite where everyone would be a lot happier if they just dropped the ball and let us go home already. I've got a family hang-over that could kill a yak, I'm beyond ready for some college football and my fingers are blood raw from unwinding roughly a zillion of those industrial-strength twist-ties they put on toys these days. They can (sort of) make me go on TV to talk about this but they can't make me pretend the market is "riveting" at this late point in 2007. Here's what I'm watching, beyond my own bad attitude:

  • Target (TGT) is hanging in okay today, relative to the rest of the retail complex. Still, the company has had a pretty rough 2007 on the fundamental side. The consumer may not be "dead" but the retailers who aren't on their A-Games are going to be better sells than buys.

  • Speaking of which, Costco (COST) says Christmas sales were "pretty good". That's about as good as you're going to see this season.

  • Did I mention the industrial twist-ties? Seriously, your average Barbie is strapped into her box in maybe 6 places and you'd need a barbed-wire cutter to snip her free. There's a special torture in the after-life for the person who created such packaging.

  • What is that purgatory? I don't know, exactly, but the person who put previews on little kid DVD's will be there as well.

  • How can you play a flagging consumer? Stick to the makers of the hottest segments, not the companies who sell them. In other words, I'd rather own Activision (ATVI) (making a new all-time high again today) than Best Buy (BBY) and I wouldn't touch Circuit City (CC) at any price.
Position in ATVI

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