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Retail shakeup: Winners emerge amid rough start to holiday season

  • More retail analysts now see holiday season sales coming in weak after early projections from the NRF and ShopperTrak called for a 3% to 4% rise. A number of firms agree with Hedgeye that the level of promotional activity will be very damaging when Q4 reports start rolling in.
  • Despite the broad carnage in the retail sector, there are some out-performers.
  • Discounters: Dollar General's increase in traffic and average basket size - along with a decent quarter from Stein Mart - could be confirming indicators that consumers are stepping down a bit with their shopping habits. Watch FDO, DLTR, FIVE, FRED, ALCS, GMAN, SMRT.
  • Luxury: Tiffany (TIF +0.5%), Coach (COH -1.2%), and Ralph Lauren (RL -0.4%) are cruising through the retail season with demand and pricing intact.
  • Powerful brands: Early channel checks on Lululemon (LULU -0.4%), Nike (NKE +0.1%), and Gap (GPS -1.2%) have been positive as consumers gravitate to what they know and like.
  • E-commerce stars: Visa (V -0.4%), MasterCard (MA +0.4%), eBay (EBAY +0.2%), Amazon (AMZN -0.8%), Dick's Sporting Goods (DKS +0.3%), and Under Armour (UA +1.2%) are some of the companies tapped to benefit as mobile/online is factored in to counterbalance reads on weak store traffic.
  • Underdogs: J.C. Penney (JCP -7.6%) is a $20 stock, according to Hedgeye. The retailer has upside to improve its embarrassingly low sales-per-square-foot mark during the holiday season and continue online momentum.
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