• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Retail's News Just Isn't Good Enough

Results are mixed at best, and this points to further trouble ahead.
By JIM CRAMER Jun 06, 2013 | 02:02 PM EDT
Stocks quotes in this article: VRA, FRAN, ASNA, CONN

What makes someone like me skittish about the stock market? First, I am a sector-by-sector, bottoms-up guy, meaning that I don't take much stock in various broad government numbers, except the employment number we get tomorrow, as that is very important for the market. I don't care all that much about the charts, but I respect what they say.

In reality, though, I care about what the companies are telling us, and I try to form a worldview, an outlook based on what real business people -- not politicians, bureaucrats, strategists or chartists -- tell me. That way I am more certain in my convictions and I feel grounded. I always say that you need to be confident in your choices, and I don't care how you make those choices. Chartists like to look at pictographs. That floats their boat. Big macro thinkers like all of that data. I like the conference calls, the earnings reports and the research, and, alas, I haven't liked what I have heard of late, particularly in retail.

Take last night. We got earnings reports from four retailers, and three were just plain disappointing: Vera Bradley (VRA), Francesca's (FRAN) and Ascena Retail Group (ASNA). Now we have not been a fan of Vera Bradley, the women's accessory store, and we actually had put it in our "sell block" not all that long ago. We didn't like the fashion aspect, the hit-or-miss element of its business, particularly its handbag line.

Sure enough, the company talked about merchandise assortment challenges, which, to me, don't happen if you have the right assortment.

Francesca's, which aims for the 18-to-35 demographic, talked about a weak spring for its apparel and accessories.

Ascena, which we have had on many times, just simply blew up, with every one of its store chains, Maurice's, Dress Barn, Justice and the newly acquired Charming Shoppes, well below plan. I mentioned on Friday's "Game Plan" that this could get hammered if it missed at all. I never expected it to be this bad, including down 7% for the core Dress Barn line and down 4% for Justice. That's plain terrible, and the company blamed weather, and more importantly, the weak middle-income consumer.

You put these three together, and you get a pretty gloomy picture of what's out there, with pretty much all ages, shapes and sizes spending less. When you couple that with Dollar General's (DG) disappointment the other day, you get a sense that May was a very weak month in the U.S. economy.

Now, that would be fine if we are all expecting that the Fed will keep rates low. But the huge increase in interest rates, at least on a percentage basis, is happening just at the wrong time. Plus there are all of these jabbering Fed heads who are thinking the Fed is too easy. When you combine higher rates with less business, that's a recipe for lower stock prices.

Now it wasn't all bad. We had a hard-goods retailer, Conn's (CONN), report good numbers. It sells all sorts of goods for the home, including appliances and consumer electronics. Normally that would be an important offset to Vera Bradley, Francesca's and Ascena. However, Conn's is a regional player, and the region is the Texas area, which happens to be in the middle of an oil boom. So I take its strength with a grain of salt.

Therefore, when I put it all together, I come back with a mixed retail picture at a time when I expected an improving picture. That, unfortunately, dovetails with the potential for a weaker housing market, now that mortgage rates have gone over 4%.

Is it the end of the world? Nope. But do these numbers embolden me to think the correction is over? No, not yet. And that's what gives me less confidence that things are going to improve for stocks, even though they've come down enough to embolden me to pick among some of the rubble.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

TAGS: Investing | U.S. Equity | Consumer Discretionary

More from Consumer Discretionary

It's Hard to Say What's Cookin' at Weber, Though It Smells Like a Short Squeeze

Jonathan Heller
Aug 17, 2022 11:30 AM EDT

The grillmaker's stock has traded wildly and heavily at times, most recently this week after it posted its latest results on Monday.

A Cannabis ETF and a Micro-Cap Stock That Have Grabbed My Attention

Bob Byrne
Aug 15, 2022 8:30 AM EDT

The ETF is showing signs of perking up and the micro-cap is a maker of electric outboard motors.

Fossil Group Sounds the Alarm While NL Industries Rewards Its Shareholders

Jonathan Heller
Aug 12, 2022 10:30 AM EDT

The former signaled lower revenues for the year while the latter declared a healthy special dividend.

Disney Is Firming Up a Bit Ahead of Earnings

Bruce Kamich
Aug 8, 2022 8:36 AM EDT

The charts of the entertainment giant are modestly positive before it reports fiscal third-quarter results after Wednesday's close.

Put e.l.f. on the Shelf as the Stock Surges to a 52-Week High

Bruce Kamich
Aug 4, 2022 2:31 PM EDT

Here's why investors should consider taking profits now.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:23 PM EDT STEPHEN GUILFOYLE

    We're Cleaning Out This Retailer From the Bullpen

    Check out the latest moves in TheStreet's Stocks U...
  • 10:24 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    To Improve Your Trading and Investing, Spend More ...
  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

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

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.

FactSet 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.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login