More Squawk From Jim Cramer: Be Careful with Apparel Stocks

NEW YORK (TheStreet) -- Retailers such as American Apparel (AEO) , Urban Outfitters (URBN), Gap (GPS) and Bed, Bath & Beyond (BBBY) announced lackluster sales results this week.

Most of these retailers are in the apparel industry, TheStreet's Jim Cramer pointed out on CNBC's Squawk on the Street this morning. "Be careful with apparel," he said.

American Eagle's 2015 fourth quarter comparable-store sales missed estimates, Gap's same-store sales declined 4% in December and Urban Outfitters's holiday season same-store sales were down 2%.

"Maybe they're serving that pizza now," Cramer joked about Urban Outfitters's decision to acquire the entire The Vetri Family group of Italian restaurants, including Pizzeria Vetri. "I'll take some pepperoni to go with a bridal dress from Anthropologie - that's always been a winning strategy."

Bed Bath & Beyond, though not an apparel company, has similarly been struggling as it attempts to compete with e-commerce giant (AMZN), Cramer noted. Even with all of the coupons Bed, Bath & Beyond mails to customers, it cannot beat's prices, Cramer contended.

Despite the difficult environment facing these retailers, many of them have bought back stock. Cramer pointed out that the share buybacks have done very little for the companies, as he compared the retailers to banks with diminishing assets.

"We don't want companies that buy back stock in retail," Cramer argued. "We want growth retailers. I'm frankly disappointed in a lot of retailers for not understanding that."

Retail companies should improve their numbers through innovation, as Ulta and L Brands (LB) have been, Cramer stated. Before yesterday's market open, L Brands reported December same-store sales surged 8%.

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