
Bam! Bam! Bam! Retailers Repeatedly Hammered
Now, suddenly, people get that retail is weak and costs are going higher?
Now, people realize it is bad for business when it is so warm?
Now, people get that a higher minimum wage hurts the bottom line of all retailers and restaurants and that the bottom line had been inflated by lower labor costs?
Now, people get that health care costs have gone up a tremendous amount since the Affordable Care Act and that premiums are soaring throughout the country?
Now, people understand that almost all of retail is being hurt by Amazon (AMZN) - Get Report and that the companies, which are immune, are few and far between?
Now, people get that when a Whole Foods (WFM) disappoints, it will not be able to maintain its pricing even if it wants to?
Now, people get the fact that a wounded Wal-Mart (WMT) - Get Report isn't going to raise prices, it is going to lower them?
You need to go to the store to see what's going on. When I walked this weekend into Costco (COST) - Get Report , which is part of the Action Alerts PLUS portfolio, I was greeted with a pile of really nice fall jackets. But, I was wearing a t-shirt and jeans. I tried it on and it looked great, so I decided to buy one.
However, I watched as a patron, after patron, came through and didn't even look at this humongous display of warmer goods. I went by these beautiful heavy cotton Calvin Klein sweaters, something I might have wanted to wear, say, to an Eagles game -- under a jersey, of course -- but then I said, "I had just bought a warm jacket and what was I doing buying two pieces of warm apparel?"
Sure, there's going to be a winter, but not until you see the whites of a winter's eyes do you feel like shelling out big bucks for it.
I said the same thing when I went to Macy's (M) - Get Report the previous week. There's no warm weather gear for sale. It's all of the stuff that you need when it is snowing. You want that warm North Face coat? I don't think so.
In the meantime, when you see these minimum wages go up, who do you think they apply to? They apply to restaurants like mine and retailers like the ones you go to, as well as fast food companies. The health care benefits are impenetrable to understand and the competitive institutions offering them seem to be dying on the vine. I just got an executive policy, where the premiums increased three times, for heaven's sake. Three times in one year! I'm not going to take that. I can only imagine everyone getting these bills at once.
Look, we will get a ratchet down when the warm weather is factored in. We will know that when the stocks don't react to the downgrades, like the brutally prescient one by JPMorgan taking down price targets for Macy's, Kohl's (KSS) - Get Report , Dillard's (DDS) - Get Report and a bunch of other really good stores. You might have thought that Macy's, which peaked at $73 a share this summer, couldn't possibly go down below $50, where it tried to stabilize last week. Yet, here it is down another 6% to $46 and yielding 3.1%. You have to go back two years to find that price. Two years ago, Macy's had 404 million shares outstanding. Now, it has 335 million. It hasn't meant a thing.
You cannot bottom-fish yet in this group. That won't happen until people feel disposable income has risen from past levels and lower oil and gas bills come due.
Right now, though, the headwinds are crushing and the group keeps getting crushed with no sign of a respite on the horizon.
At the time of publication, Cramer's Action Alerts PLUS held a position in Costco.








