There's a divergence in retail right now.
The latest negative data to come out seem to be a microcosm of why.
September Retail Trends
"Revenue trends across the board finished on a weak note in September, as defined by search data modeled into proprietary baskets correlated to historical company-reported revenues," wrote Wedbush analyst Jen Redding in a note out Tuesday.
Simply put, search trends potentially indicate lower revenues in the fiscal third quarter for retail and apparel companies.
About 81% of the 27 companies Redding covers saw decelerating search interest for September, on a year-over-year basis. Redding said Abercrombie & Fitch (ANF) - Get Report and L Brands (LB) - Get Report , owner of Victoria's Secret, saw the worst declines. And for the week ended Sept. 28, Abercrombie saw a 40% decline in search, while L Brands saw a 23% drop.
In early September, Goldman Sachs analysts wrote in a note that Abercrombie management said the company was experiencing a high promotional environment in the face of an increasingly fierce competitive environment."
Nordstrom (JWN) - Get Report experienced a similar trend when it missed estimates on revenue (it beat on earnings because of cost management) in the face of higher promotions in stores, as management noted. Several analysts, including Goldman, JPMorgan and KeyBanc Capital Markets, cut their price targets. Nordstrom saw 6% year-over-year growth in search traffic for September, a deceleration from August's 9%.
Old School vs. New School
Sure, there is some concern the U.S. consumer may slow down, especially as troubling indicators for employment continue to trickle into the fray. But Redding notices that the retailers that focus their sales strategies on digital channels are the ones that are able to grow their businesses.
"Nordstrom, I think, has got a long way to go if it wants to be apples to apples with Lululemon."
While LULU is "forward looking," Redding said, "Nordstrom kind of just let things happen." She added, "Probably the majority of the department stores fall in that space."
Notably, Lulu's search traffic grew 31% in September, better than the 30% growth in August.
Abercrombie, L Brands and Nordstrom are not known for their digital strategies. Their stocks have fallen 57%, 70% and 45%. Lulu's stock is up 357% in the past five years.