Last week, investors were hit with a number of earnings reports from big retailers such as Best Buy, Home Depot, Lowes, Target and Walmart, to name just a few.
Results were mixed, and the stocks traded more based on what management teams expected, rather than what had happened in the previous quarter.
Furthermore, retail sales in October rose 0.8%, according to the Commerce Department. Economist.
That surpassed estimates of 0.6% growth.
Meanwhile, the September sales figure was revised higher to 1%, up from a previous 0.6% increase.
The report was a good indication that the American consumer is doing well heading into the holiday shopping season, but that doesn't mean that the market can't turn on a dime in the near future. If that happens, investors don't want to be holding a bag full of the wrong stocks.
But despite all the good news and earnings reports early in the week, investors bashed a few retailers on Friday after poor earnings reports and concerns over shoe sales.
Revenue of $821.7 million was below the $830.6 million forecast and way off the $878.6 million posted a year earlier. And the retailer posted earnings of just 2 cents a share, compared with analysts' estimates of 21 cents a share and 48 cents a year earlier.
Abercrombie & Fitch said that challenges would remain in the short term but that the customer, marketing and product experience would improve.
The retailer has closed 15 stores this year and plans to shutter another 35 in the fourth quarter, due to natural lease expiration. That means that Abercrombie & Fitch will have closed 350 stores over the past six years.
Of the retailer's 745 leased locations, 50% of them are up for renewal in the next 18 months.
Abercrombie & Fitch looks like a sinking ship, and investors would be wise to steer clear.