Manny Chirico said it all last night on "Mad Money." The CEO of PVH (PVH) said it is a very strong back to school season and a lot of that is good numbers for him from Kohl's (KSS) and J.C. Penney (JCP).
I think this says three things.
- August was a very strong month in this country, whether it be for retail or for autos, where the numbers are running at an amazing 17.5 million pace. I think the job creation is driving a lot of consumer confidence, opening wallets.
- The lower gasoline prices are a tax cut, plain and simple, and they are impacting all of retail including PVH, as well as Coscto (COST), which reported superior numbers this morning.
- It is not too late to buy PVH, because if it is on track it is a cash-generation machine. It can pay down debt and even, if it has to, sell retail stores to bring its balance sheet back to a better condition. Warnaco's problems are now behind them and it is, once again, a terrific play on two great worldwide brands: Calvin Klein and Tommy Hilfiger.
Do not underestimate the power of a strong consumer to create profits for domestic companies. I still have a caveat about the kind of stock you can buy, because even when we have days where peace seems to be breaking out we get an overweening sense that the cold-war-ending peace dividend is going away. We are fighting wars on three fronts in this country, the nation of Islam or whatever it wants to call itself, the Russians and the Chinese. The Russians can really cause a lot of havoc with European companies. So can Germany's maddening tight-fistedness that ECB head Mario Draghi is fighting. Finally, there's the trade war that China's embarking on that is touching on everything from antitrust issues to the desire to hobble Yum! Brands (YUM) through a rancid supply chain.
Against that stands employment growth and low rates in America. Sure, housing hasn't gotten back on firm footing. I think that's because the banks are so afraid of bad loans spiking that they would rather not loan. But auto loans are plentiful and so is spending on back-to-school. Draghi playing FDR to Merkel's Hoover can keep Europe from escalating downward, but it's game-on in the United States for certain.
Random musings: I have Deckers Brands (DECK) on tonight, and while it is expanding overseas it, as well as Skechers (SKX), are new product stories that are selling very well.