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The Few Retail Standouts

"There were only a few standouts in the reports this morning."

Hmmm. You're highly selective. Other "standouts" (assuming your standard is +4.0% or more) include APP +22.0%, BKE +14.5%, HOTT +8.3%, MWRK +6.0% and CTR +4.0%. In addition, on Thursday URBN reported its quarterly comp, +10.0%, with its Urban Retail division up 17.0% and the small Free People division up 4.0% (Anthropologie, at +2.0% was the drag on the corporate number).

APP has turned in a double digit comp every month since it made its first report in March (as well for the comparable month of the previous year), and for six consecutive quarters. BKE has turned in consecutive monthly double-digit comps since August 2007, preceded by similar results in March and June 2007. URBN, which reports quarterly, has had four consecutive double-digt quarters.

American Eagle Outfitters' Wings May Be Falling Off

Beneath the numbers, let's look at the basic businesses.

The parent chain is essentially maxed out domestically. How much promise there might be for it overseas is a question scarcely raised, let alone argued. M+O doesn't yet show much (and ANF's lack of success with its Ruehl stores, aimed at the same demographic, isn't encouraging). I visited my first M+O store last month, at the Mall of America, and was startled by stratospheric price points -- any number of triple-digit items, including a tee-shirt (okay, maybe a "pullover" at $148 (if I remember correctly). It doesn't seem the right time for it, as now configured, really to take off. Their imitation of ANF's kids division is still pie in the sky; ANF has had a checkered history with "abercrombie" They shuttered stores in 2004 and 2005 (dropping from 175 to 161) as returns had become disappointing, only to add 17 in 2006 and 22 last year, encouraged by a string of positive double digit comps. The times being what they are, its sales have gone sour again.

It seems to me the only really imminent prospective payoff for AEO is the aerie concept, but whether the tail can propel the whole donkey is another question.

August Same-Store Sales Roundup

Isn't it about time that people in the financial media stop giving respect to the "estimates" guessing game? It's bad enough when applied to quarterly earnings, but becomes absolutely ridiculous applied to monthly sales reports.

Isn't it obvious that what matters is the change from the comparable period (or the monthly number as part of a pattern of monthly numbers for that company) or how the sales report in itself or as part of a pattern compares to that of peers, not even beginning to consider the relative impact of markdowns on the sales numbers and their implications for earnings, not what analysts estimate, with something like a 15% accuracy record.

It is mindboggling that reviews of analyst ratings (most based on predicted earnings changes) over the last several years have found
that the most rewarding buys are those earmarked "sell" by the analysts, the net best returns come from recommended "holds," and the worst from recommended "buys."

This same skill when applied to same store sales finds that the list above comes close enough to the reported comp to be considered accurate in predicting the number (whatever that number is worth in isolation) for by my reckoning six (JWN, TJX, LTD, BJ, FDO and FRED), or 15%, of the 40 companies for which estimates were made.

I've followed specialty retail, especially apparel, sporting goods and variety, closely for the last nine years, and since whenever this "estimating" disease took hold this kind of whistling-oin-the-wind inaccuracy has been the norm.

I just don't get it.

But this reference to variation from a "consensus" estimate is now a virtually standard reference in the lead of earnings or comp-sales related news stories throughout the financial media.

And it is meaningless in relation to a company's prospects.

To me it seems to be merely a fast shuffle creating more trading commissions and profits for brokers and trading firms.