After weak same-store sales in November, it looks like all the high-end apparel retailers went off the fiscal cliff. Nordstrom (JWN) and Saks (SKS) are about 10% off their 52-week high. Apparel makers Michael Kors (KORS) and Ralph Lauren (RL) are down between 13% and 16%. But I think this weekend will prove to be a blockbuster. In fact, so-called "Super Saturday," also known as the last weekend before Christmas, could be bigger than Black Friday.
According to a survey done by Visa (V) , 73% of consumers still have presents to buy. Retailers blamed Hurricane Sandy and the election for a weak kickoff to the holiday season, but this year there are maximum number of days between Thanksgiving and Christmas. Retailers expected a two-week lull after Thanksgiving, but spending is about to heat back up again.
According to MasterCard Advisors SpendingPulse research, last year Super Saturday fell on Christmas Eve and only generated a meager $12 billion in sales. But, with a full weekend ahead of consumers, SpendingPulse is expecting sales to top $18 billion. In fact, sales for the 10 days before Christmas are expected to exceed $147 billion. More than 50% of all jewelry and luxury sales are expected during this time.
Back in October, I thought Michael Kors would continue to blast higher and reach the low $60s. I still do. KORS is on trend and unlikely to slow anytime soon. A whiff of good news will send the stock much higher.
Last February, I had concerns about Ralph Lauren's valuation. At the time, the stock was flying higher on blowout numbers. A bunch of rookie shorts were squeezed to death and the stock hit $182. Ten months later, RL's valuation is less of a concern. The company should have a solid holiday season. I think investors can ride this pony higher.
Nordstrom's and Saks have been on a roller coaster all year. Last month, I thought Nordstrom's incredible streak of double-digit comps were coming to an end. It seemed to me the company would settle back down into the mid-single digits comp area, which isn't a formula for outperformance. Likewise, on the last conference call, Saks management also guided same-store sales to the mid-single digits. While I think Nordstrom is better managed than Saks, I don't think either of them will outperform. My advice: Stick with the stuff inside the stores and avoid the mall this weekend.
