Gas Starts Hitting Retailers

 | Mar 15, 2012 | 11:37 AM EDT
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If you didn't know any better, you would say that today is the day that retail is showing its true colors. Today is the day that we are discovering that gasoline at $4 does matter.

How else can we explain Vera Bradley's (VRA) sorry projections for its next quarter or the disappointing outlooks for Guess (GES) and Rue 21 (RUE)? How else do we deal with the decline in the stock of Ross Stores (ROST).

First, I would say that as much as the conclusion seems cogent, each of these stocks is very different. Vera Bradley, a controversial equity, has set itself up for difficult comparisons because it has a strategy of quick turns based on fashion, a very dicey game plan. There are lots of shorts in this accessory name and the guidance makes it pretty clear that it can't deliver. Why else would it say that the next quarter is looking for 27-29 cents a share when the street is looking for 32 cents? But it kept the year guidance and I question -- as much as I don't like the stock -- exactly how poorly the company is going. I feared going into the report that the shorts would color the outcome and that seems to be the case.

Guess? Tough, tough business. They have to guess at what the consumer wants each quarter and I think that they guessed poorly. Remember, they have a youthful clientele and it's notoriously fickle. Still, $2.50-$2.65 vs. $3.20 and change says to me they are way off track.

For RUE, it's hard to tell. They sure didn't make you feel terrific about the future and it is a momentum stocks. You have to have numbers raised, not lowered. But it's a 20% grower, with only a 17 PR. I wouldn't give up on it.

And that brings me to Ross Stores. Ross did the number. Ross gave good guidance. Ross bought back stock cheaply. Ross' game plan is still intact. You've got 7% comps and a revenue number that was superb. Was this chain of off-price apparel goods hurt by gasoline?

No, not at all. I think the market has it wrong. This stock's a Buy. Right here. Right now. Forget the other guys. They have problems. Ross doesn't. Profit taking pure and simple. What an opportunity.

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