The U.S. retail sector is that segment of the U.S. economy related to consumer purchases at the retail level. In the simplest form, the retail sector consists of Americans buying goods and services at retail establishments…stores. The retail sector accounts for about 10% of U.S. gross domestic product (GDP).
Black Friday is less than two weeks away, and I sense there’s increasing nervousness in the retail sector. For some, this weekend of spending accounts for over 50% of annual sales.
Macy’s, Inc. (NYSE/M) reported a strong fiscal first quarter in which it beat the Thomson Financial earnings-per-share (EPS) consensus estimate by $0.08 per diluted share or 20%. But while Macy’s offers investors some hope, the good news was short-lived, as the stock’s results may have had more to do with the company’s own success than a strong retail sector.
Wal-Mart Stores, Inc. (NYSE/WMT) and Kohls Corporation (NYSE/KSS) followed suit with soft reports that left investors worried about the strength of the holiday shopping season.
In the case of Wal-Mart, the world’s largest retailer reported a 0.1% decline in comparable U.S. store sales (without fuel) for the 13 weeks ended October 25, down from 1.7% growth a year earlier. For the 39 weeks ended October 25, Wal-Mart saw its U.S. sales contract by 0.4%, versus 2.4% growth in the year-earlier period. The result from Wal-Mart raises some red flags for the retail sector as we head into what is the most critical shopping time of the year.
Mike Duke, president and CEO of Wal-Mart, noted in the company’s quarterly report that the retail sector is “competitive.”
Wal-Mart also doesn’t appear to be too optimistic going forward and that makes me nervous, since the company is a good barometer … Read More
Success in the retail sector is all about image, marketing, the brand, and having the right people to execute on the strategy.
J. C. Penney Company, Inc. (NYSE/JCP) is a perfect example of how not to operate in the retail sector and, as such, the company is failing.
Aeropostale, Inc. (NYSE/ARO) and Abercrombie & Fitch Co. (NYSE/ANF) are two other retailers that have failed to adapt to the changing retail sector amid competition.
In the luxury end of the retail sector, Coach, Inc. (NYSE/COH) continues to struggle with sales. Part of this may have to do with some of the key metrics I mentioned earlier, but a major factor has definitely been the emergence of Michael Kors Holdings Limited (NASDAQ/KORS). As many of you will already know, I favor Michael Kors as the top player in the luxury retail sector.
While Coach and Michael Kors both are heavily operating in the sale of women’s accessories in the retail sector, the big difference, in my view, has been the successful move of Michael Kors into men’s and women’s apparel, which is found in many of the top-end department stores, as well as company stores. From pants, shirts, and suits to belts and coats, Michael Kors is quickly becoming a sought-after brand for fashion lovers in the retail sector.
The chart of Michael Kors below shows the steady upward trend in the stock since the beginning of 2012. There is some congestion and resistance at this time (as shown by the horizontal blue line near the top of the chart), but we are seeing a bullish ascending triangle and a possible upside … Read More
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