Beware of a whole new pattern: down is no longer out. This morning we see a big run in Urban Outfitters (URBN). Why? Because it simply isn't as bad as we thought. It's expanded its format and made it much more of a home goods store. It pivoted. At the same time, it is offering more in the intimates, accessories, shoes and beauty category.
In other words, it has re-adjusted to what the consumer wants, all the hot categories, and it is doing extraordinarily better than expected. Notice I didn't' say extraordinarily well. Just much better than we are used to. That's very similar to J.C. Penney (JCP), which mentioned on its bang-up call that Sephora -- the perfume and make-up store within a store -- footwear, handbags and home all outperformed.
In other words, these two companies figured out what the customer is buying and took advantage of it for the holiday season, and it paid off. Both are examples of management "getting it," just really understanding what's selling and what isn't, a constant reminder of the reinvention of companies just when you have written them off.
To be fair, it is only since the second week in February that this market has embraced anything that's been a fallen angel, and I think that's because there's been such a gulf between the stocks of the have and have-nots, not between the companies themselves.
You know what else has been creeping up ever so slightly until the last 28 hours? Another former darling: Whole Foods (WFM). I was mystified why the stock didn't jump after the last quarter, as it gave you a preview of so much that is good that is happening whether it be loyalty stores or smaller formats or better delivery. Plus, the company is leveraging that balance sheet, just like Chipotle (CMG), to gather up shares because the company's management has been adamant that the turn is at hand even if the naysayers say no.
Can we also admit that the imminent demise or disarray of some smaller competitors has really hurt them, and the ascendance of Kroger (KR) as a Whole Foods killer may have reached its apex? I think that the stock's a buy right here, because it's only where I expected it to be immediately after the quarter was reported.
These are not idle moves. They are all part of what I regard as a major shift in the market to sift through what we thought was dead and do some buying. It is a welcome change, and a sign that the rolling bear market in all things retail has at last run its course.
