Retail Reports Dispense With Reality

Provided you can maintain courage that won't fail, why don't you come and play a little parlor game with The Business Press Maven this weekend?

I'll give you a mistakenly positive headline and a portion of the misleading article commentary about JCPenney(JCP - Cramer's Take - Stockpickr) and Nordstrom(JWN - Cramer's Take - Stockpickr) that followed and you tell me what underlying fact is left clear out of the equation.

Want a hint of what to look for? See if there is any mention on when these expectations were last set and by what magnitude they were reduced at that point. That, after all, is what lets you know best what near terms trends in the business are and management's grasp of their reality, as well as whether a retail recovery is truly at hand.

They Just Don't Get Retail!

Here's a real happy talk headline from Reuters, which (accepting on behalf of many others) will receive this week's dreaded Business Press Maven "Back of the Hand" award: Department store sales weak, but beat Street

Got that? They beat Street estimates. With that comes the implication that near terms trends in the retail business might be good, meaning high gas prices and foreclosed homes be damned, a recovery is at hand.

The lead was too positive by half because it came complete with the same built-in caveat we saw in the headline: Results beat estimates!

"The weak economy took its toll on department stores on Thursday, as retailers Nordstrom, Kohl's and J.C. Penney reported lower first-quarter net profits, with all citing challenges stemming from the weakened U.S. economy. Although the results were glum, investors had expected worse -- all three retailers beat Wall Street expectations for the first quarter, despite the slump."

Break out the bubbly! They soon spell it out when it comes to JCPenney: "Earlier in the day, J.C. Penney posted a 50 percent drop in net income, to $120 million, or 54 cents per share. Like the others, earnings were above Wall Street estimates, in this case 50 cents."