Retail: Winners and losers emerge as consumers adapt

Retail is in a state of "bifurcation" as on-trend luxury retailers (KORS, JWN, TIF) and home improvement specialists (HD, LOW) thrive, while heavyweight merchandise retailers (WMT, TGT, COST), mall-based apparel chains (AEO, ARO, LTD), and discounters (DG, DLTR, FDO) disappoint.

As execs with Target noted during the firm's earnings call this morning, consumers seem more than happy to buy new automobiles and fix up their houses - but have tightened up on toothbrushes, socks, and soap.

A few companies - through some good luck and solid execution - sit in a consumer demand sweet spot. Ross Stores (RST), TJX Companies (TJX), and Subaru (FUJHY.PK) come to mind.

Related ETFs: XRT, RTH, PMR, RETL.

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Comments (4)
  • bgold1955
    , contributor
    Comments (2352) | Send Message
    Don't put COST in the arena of disappoint as their sales have exceeding expectations every month (except July) in the 5% yoy. In July they barely missed but still was up 4%. Picking more up < $ 110. A buying opportunity as there is nothing wrong with COST or TGT.


    Retail stocks are typically weak thru mid August - Sept cuz the 3rd qtr is retail's soft time of the year. Look at M, JWM, and TGT going into last qtr. Group was weak in 4th qtr last yer due to elections. WE WILL HAVE A GREAT CHRISTMAS BUYING SEASON THIS YEAR!! Even thou this is the shortest period for shopping days between Thanksgiving to Christmas.
    21 Aug 2013, 01:50 PM Reply Like
  • Esekla
    , contributor
    Comments (4744) | Send Message
    Yes, while I agree that the gap between the haves and have nots is widening, Target and Costco actually executed fairly well in the face of that. In particular, TGT earnings this mornings simply showed the effects of the expansion into Canada, where consumers there are still learning of they value they provide. Execs confirmed that the plan is on track and will yield growth in years to come.
    21 Aug 2013, 02:09 PM Reply Like
  • BruceInKY
    , contributor
    Comments (445) | Send Message


    I'm on the ground floor as an independent consumer discretionary retailer. Localized market conditions, uncertainty over changing laws (not including ACA, just what could happen on other fronts in my own state), supplier moves to favor chain accounts, overall consumer sentiment, rent and utility increases, etc. are making me ultra cautious and looking to reduce not expand inventory.


    Where is all the "GREAT" coming from, other than within the Beltway and around pet state and metro government projects?
    22 Aug 2013, 01:13 AM Reply Like
  • bd4uandu
    , contributor
    Comments (2074) | Send Message
    I wish Target would get it together in the grocery department. Products always changing or being moved around. As a user it appears they don't know what their doing. They wouldn't need all of those people asking if they can help you find something if they would leave it alone. I asked once and they didn't know either ... So it goes.
    22 Aug 2013, 04:59 PM Reply Like
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