NEW YORK (Real Money) -- There's an awful lot of soul-searching going on in retail right now. It's become one of those moments where management teams are wondering about what happened this quarter, which, for many but not all, was a very tough one.
The Gap, fresh from giving shorts a slam about the head with some terrific monthly October comps, reported overall comps that were a total letdown and signaled that there was, in the word of excellent CEO Glenn Murphy, a lot of "fatigue" among the consumers. I didn't think the quarter was all that bad, but the Street, exemplified by BMO, thinks that the momentum has peaked, in part because of disappointing gross margins and that the lack of upside guidance could spell the end to the streak. I think that's severe, but the nation's largest apparel chain didn't give you much reason to hold on to it after that $37-to-$41 romp.
Ross Stores was a real puzzler. The quarter was worrisome on all fronts, including a marked deterioration throughout the quarter. I think it is safe to say after examining this quarter that Ross Stores is officially the poor man's TJX (TJX), without a lot of new assortment and without a lot of brand names that attracted shoppers. This terrific regional-to-national growth story may recover, but you could hear the analyst dismay as Ross lost its most-favored-nation status.
But the most worrisome of the three was The Fresh Market because this one had real momentum not that long ago and seemed to be a legitimate challenge to Whole Foods (WFM). Lots of the conference call was devoted to two problematic cluster launches, Sacramento and Houston, that simply were disappointing, causing analysts to question whether this company could handle a nationwide rollout, so vital to maintaining that elevated 33 price-to-earnings multiple. That one will shrink quickly.