This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The End of the Mac & Cheese Trade

Let's dig into some of the recent retail earnings reports and extract evidence of the end of the trade-down effect.

Inferior/Low End: Wal-Mart (WMT - Get Report) reported reported fourth-quarter 2010 EPS of $1.17 vs. analyst estimates of $1.12. The company benefited from strong international sales but missed out on revenue expectations due to disappointing sales in the U.S., where same-store comps fell 1.6%.

At the same time, Wal-Mart warned that it was expecting soft sales for the first-quarter and fiscal-year 2011, evident in its guidance for fiscal-year EPS of $3.90 to $4 vs. analysts' expectations of $3.97. This would imply earnings growth of 7% to 9% in the coming year.

Target (TGT - Get Report), another low-end retailer, echoed Wal-Mart's results with a better fourth quarter while also tempering expectations for the first quarter and coming year.

Normal/Middle Market: Nationwide department store Macy's (M - Get Report) reported fourth-quarter 2009 EPS of $1.40 vs. analysts' estimates of $1.32. For its fiscal-year 2010, Macy's expects to earn $1.55 to $1.60 per share, which straddles analysts' estimates of $1.57 per share. The midpoint of the guidance implies year-over-year earnings growth of 12%. Management expects same-store comps to increase 1% to 2% after declining 5.3% for 2009.

Luxury/High End: Investors key in on two prominent high-end retailers: Nordstom (JWN - Get Report) and Tiffany. This week, Nordstrom reported a very strong quarter. The media's observation that Nordstrom missed earnings estimates by 2 cents might be correct, but it's misleading. After reporting strong sales for the month of January, management informed investors to expect the company to handily exceed its previous earnings outlook. Since its last reporting earnings, analysts moved up its earnings expectations for Nordstrom by 14 cents. Clearly, they were too aggressive. Earnings are expected to rise by 24% for Nordstrom in 2010.

Tiffany will report its earnings on March 22.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
JWN $51.13 -3.03%
M $39.59 -2.49%
TGT $79.50 -2.25%
TIF $71.35 -0.97%
WMT $66.87 -2.96%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs