Maybe all we needed as a cold snap? That's what you have to figure when you took a look at what has rallied hard today, stocks like Deckers (DECK), VF Corp. (VFC), Lululemon (LULU) and Ralph Lauren (RL). The unseasonably warm weather had weighed on these stocks like millstones. It had been making people suspicious that no numbers can be made.
Here's the problem: I worry that the cold weather came too late. You need it in time for gifting, not buying for yourself, and these companies didn't get that weather in time for the holidays.
This morning Goldman Sachs put out a terrific note about how Lululemon seems to have gotten its inventory issues behind it. Yesterday we caught a VF Corp. upgrade, something that would not be all that smart if the supply chain were brimming with North Face coats.
Obviously Uggs are ingrained as cold-weather products -- so ingrained that without cold weather, the comparisons with the previous year may be too hard.
For me, all of these stocks have become difficult to own because of the lateness of the freezing weather. They are all classically expensive, priced for perfection, so there is not a lot of room for error.
I would wait until we see the quarters before committing more money to these. They are great companies. I just don't trust their stocks until I am sure that the warm-weather holiday season doesn't come back to haunt them.
