Friday 8:30am we get the November retail sales report.
Gaming expectations and reactions to a reported number like
this one is always very hard, as there is so much noise in day to day equity
movements.
Nonetheless, my hypothesis is that: a) the number will
be less than expectation; b) this surprise is not embedded in current equity
prices; and c) the disappointment will catalyze a selloff in retailers.
That's how I am positioned; we will see if I am right or wrong.
Why might it disappoint? Black Friday was underwhelming.
Online retail sales are up marginally, and online should grow faster than
brick and mortar (8-10% sales taxes in CA, IL, NY). I posted before that
Google search data is down for many retailers, signifying intent to shop is down
as well. Neiman Marcus and Abercrombie have had dreadful sales results.
The best supermarket chain in the business (Kroger) was taken to the
woodshed yesterday. Videogame sales have been weak. There is a fair
amount of anecdotal evidence that higher stock prices are not driving consumers
to spend more freely than last year.
Consumers see unemployment all around them. They know the amount of shadow inventory in
housing and the trajectory of house prices.
They are deleveraging.
XRT is a good vehicle for betting against retail. An individual idea mentioned on the Slope sometimes
is DECK. My strong anecdotal teen
evidence says UGGs are on the way out. DECK market cap assumes otherwise.
