Retail Is Alive and Kicking
Posted at 5:30 p.m. EST, Feb. 17, 2010
The most maligned industry out there might be retail. No matter what happens to the companies, people think the news is bad. These people are stuck in the past.
In the past few days, we have had fabulous reports from VF Corp (VFC), Perry Ellis (PERY) (mentioned in the columnist conversation) and Phillips Van Heusen (PVH). These three pretty much run the full spectrum in clothing retail. But The North Face, Arrow and Perry Ellis seem to mean nothing to people.To me, they are terrific barometers. So is Jones Apparel (JNY), another company that last week reported a nifty quarter, which was obscured by some one-time hits. Darden (DRI) and Whole Foods (WFMI) are two other plays I consider quintessentially retail. Whole Foods in itself is a sign of a healthy consumer because it is as expensive as all getout to go there; yet, its take-home business is booming. But it isn't so booming that it's hurting the Olive Gardens and the Red Lobsters of the world. Or, consider Panera (PNRA), Chipotle (CMG) and Cheesecake (CAKE). These are moderately priced places, and you could argue that strength there doesn't mean much. I say, "Wait a second, these places saw slowdowns when things got tough; the slowdown is over." Speaking of places that saw slowdowns, how about Abercrombie & Fitch (ANF), the quintessential overpriced teen retailer? Even this company has its act together now. I can throw in a whole bunch that haven't recently reported, Tiffany (TIF) and Nordstrom (JWN) being the best examples. Also, do you think we would get all of those upgrades of Home Depot (HD) if business wasn't improving? How about that great recent number from Costco (COST), which is propelling that stock up nicely? The simple conclusion: Retail is alive and well. Once again, because unemployment is high, we dismiss it, or we say it is an unimportant time of the year, or that a calendar shift helped the results. I say, give me a break. Things are better. That's all there is to it. Random musings: Applied Materials (AMAT) and Hewlett-Packard (HPQ) seem pretty terrific to this guy. At the time of publication, Cramer was long Costco and Home Depot.
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