Retailers Are the New Airlines

 | Jul 11, 2014 | 11:47 AM EDT
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Remember the late and unlamented Hit Or Miss chain of women's apparel stores?

These days I think that namesake business represents the industry itself, where retailers seem to fall by the wayside only to be resurrected and then get crushed again.

It wasn't that long ago when Gap (GPS) was heralded as one of the great turnaround stories in retail history. But now all of that's being called into question as its -7 comparable-store sales for both Banana Republic and the flagship Gap that we got last night are simply baffling. What gives? I wonder if they know, or are the just another victim of the retail funk that The Container Store (TCS) used to explain its anemic sales.

Or how about last night's disappointing Rent-A-Center (RCII) numbers? They took my breath away, especially when they cited "macroeconomic weakness." I used to buy this stock on macro weakness as people would rather rent than buy in tough times. Another unfathomable reason to go with an unfathomable report.

These all come on top of that shockingly disheartening set of comp numbers and gross margins out of Lumber Liquidators (LL), numbers that called the whole concept into question.

I think we are coming to a moment when we may have to declare this group un-investable, not unlike the airlines of yore. It's just too hard to figure out who is going to hit and who is going to miss. Of course a premium should be accorded the winners, like Costco (COST), but that's not happening either -- at least for the moment.

I think you cut exposure both ways. You aren't getting paid to take the risk.

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