Teen Retail's Unknowable

 | Aug 02, 2012 | 11:19 AM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:






Do you have teens? I do. Have you ever, ever be able to figure what they want from minute to minute, let alone month to month.

Yet people keep thinking that they can be gamed. I am constantly being bombarded by people saying, "isn't this the month that Abercrombie & Fitch (ANF) will turn around? Or isn't True Religion (TRLG) down enough? Isn't this the moment for Aeropostale (ARO)?"

To which I say, "it is no more the moment than when my daughter says to me in the last week of May 'I hate what Hollister (that's Abercrombie) has in its stores,' one month after she asks me for a birthday present from there."

Obviously my 18-year-old knows best or is at least unknowable because the numbers for Aerospostale and Abercrombie & Fitch are amazingly bad and the stocks have been crushed. As they should be given how, like True Religion, they have missed the market. Of course Abercrombie and True Religion problems are complicated by the fact that they actually have a lot of Europe and in ANF's case, numbers are down more than 20%.

Meanwhile we know exactly what we can gauge and that's management that knows its customers and consistently offers product they want. That's why we should be gravitating to stocks like Macy's (M) and Gap (GPS), or Ross Stores (ROST) and Costco (COST), which have their customers down to a T, or even a T-shirt, and aren't dice rolling a fickle consumer from month to month.

You want higher risk with a higher reward you can go to Amazon (AMZN), which doesn't even need to know what investors want because it has no inventory to begin with.

Or, you can look at it another way. Not that long ago J.Crew went private in part because the company was never going to get credit from Wall Street for its fabulous innovation and its willingness to take risks. I don't blame them. Two years ago I told my daughter about how amazing Madewell, which has a ton of teen apparel, was doing and that she simply had to go in and see what they were doing. The next day she told me that it was hideous.

A few months later I asked her what she wanted for the holidays. Simple, she said, she wanted a gigantic gift certificate to Madewell because the stuff was so cool and everyone was wearing it. When I reminded her what she had said not that long ago about Madewell she looked at me like I was from Mars and told me I had no idea what I was talking about.

And you wonder why Mickey Drexler took the company private. Abercrombie & Fitch and Aeropostale are still publicly traded. It's just that they shouldn't be publicly traded by you. Some businesses are simply unknowable. Others are consistent and can be bought on any weakness.

Suffice it to say I have no idea if the weakness for ANF and ARO is going to continue or if this is the opportunity you have been looking for. The problem is, neither does management. So you can't fathom them either. Don't even bother to try.

Columnist Conversations

our chart of the week worked out nicely! we'll bank this big winner and roll up SOLD BIIB AUG 270 CALL AT...
No news yet, but Ralph Lauren (RL) is surging in early trading. Shares that previously traded as hi...
Good morning. Just a few comments about stocks that are in the news. Forget what I said about Chinese Inter...
Just what is the Fed thinking about these days?  Let's talk about it at 130pm PST (430pm EST), free to at...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.