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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