Quarterly Update on the Stock Gender Divide

This article originally appeared on RealMoney.com on Sept. 2, 2014 at 5:00 p.m. To read more content like this AND see inside Jim Cramer's multi-million dollar portfolio for FREE... Click Here NOW.

One of the concepts I wrote about earlier this year that proved to be somewhat controversial among Real Money subscribers concerned the difference in performance and potential for male- vs. female-oriented retailers.

I last discussed the issue in May and that column has references to earlier columns in which I laid out the basics of the argument for the differentiation.

In this column I'll consider the performance of the stocks I've used this year as benchmarks for this discussion.

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Here's the three-month performance.

Men's Stocks: Anheuser-Busch InBev (BUD)  up 2%, Boston Beer (SAM) up 1.2%,AutoZone (AZO) up 1.4%, Home Depot (HD up 16%, Harley-Davidson (HOG) down 10%, Snap-on (SNA) up 6% and Sturm Ruger (RGR) down 15%.

Women's Stocks: Lululemon Athletica (LULU) down 8%, Coach (COH) down 9%,Macy's (M) up 4%, Nordstrom (JWN)  up 1.5%, Williams-Sonoma  (WSM)  down 2%,Bed Bath & Beyond (BBBY) up 5% and Starbucks (SBUX) up 5%.

Year-to-date returns.

Men's Stocks: Anheuser-Busch InBev up 8%, Boston Beer down 0.5%, AutoZone up 14%, Home Depot up 14%, Harley-Davidson down 7%, Snap-on up 15% and Sturm Ruger down 32%.

Women's Stocks: Lululemon Athletica down 32%, Coach down 34%, Macy's up 17%, Nordstrom up 12%, Williams-Sonoma up 12%, Bed Bath & Beyond down 19% and Starbucks up 1%.

The male-oriented stocks in aggregate are continuing to outperform those in the female-oriented group, as is evident in both the last three months and year to date and has been the case for the past two and five years.

The male-oriented stocks are also exhibiting performances that are more similar, with an upward bias in their stock prices on aggregate.

The female-oriented stocks are exhibiting a much broader range of price performance, with the specialty retailers, (Lululemon and Coach), greatly underperforming the large retail distributors, (Macy's and Nordstrom).

Although Bed Bath & Beyond is up 5% in the past three months, it's -19% performance year to date vs. Macy's and Nordstrom's 17% and 12% YTD returns, is probably indicative of the growing income and wealth disparity in the economy overall.

Another troubling aspect of the underperformance of BBBY is that it is occurring even as household formations have been slowly, but steadily, rebounded this year after having actually gone negative for the first time ever at the beginning of this year.

Typically, as household formations rise consumption patterns shift toward female and family needs and away from male consumption.

In that vein, the decline in Harley-Davidson's stock in both the past three months and year to date would seem logical, but the shifting of those consumer dollars into companies like Bed Bath & Beyond are not occurring.

This is probably symptomatic of the lack of financial resources available to the 25-34 year old demographic, which is also reflected in their renting primary residences, rather than buying, either by choice or necessity.

What appears to be happening as well is that although this group is beginning to exhibit a willingness to form households, they are also choosing to reduce net consumption and increase savings rather than divert income previously consumed for gender-specific desires into family needs.

If the nascent resurgence in household formations continues and the increase in saving rather than consuming income also continues, it is probable that the performance of the stocks in both groups will turn more negative.

At this juncture it's impossible to determine if household formations is a sign of increasing confidence or simply a survival mechanism by both genders.

This would be in keeping with my observations in my column in which I noted that both disposable and discretionary incomes are being negatively impacted by rising rental costs.

Anecdotally, I would note that today all seven of the retail stocks I discussed in that column that would logically benefit by a shift toward non-branded apparel purchases were in the green, while 8 of the 11 stocks that I noted would be negatively impacted by this shift were in the red.

The totality of the performance of all 33 stocks I referenced in both column series appears to be reflective of the broad macroeconomic and demographic patterns discussed in them.

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At the time of publication, Arnold had no positions in any of the securities mentioned.

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