No, the holiday shopping season isn't over; neither is the fourth quarter for retailers and restaurants.
Hence, we can very easily get some big moves up and down for said sectors, as investors position ahead of pre-announcements in early January (earnings due out in February). Although the holiday shopping season has been decidedly mixed, there have been winners (beyond Action Alerts PLUS portfolio holding TJX Companies (TJX) ) and losers (beyond Sears (SHLD) ).
Here are several to consider in each category:
Losers
Under Armour (UA) : The stock hasn't done much since the company's warning back in October with respect to its long-term profit guidance. But it's hard to imagine the company, which is held in the Growth Seeker portfolio, backing away from that cautious commentary and taking a cautious stance on 2017 guidance when it announces earnings based on trends during the holiday season.
There was just a ton of discounted sportswear product in the market this season from Nike (NKE) , Adidas (ADDYY) , Under Armour. The extent of the discounting bordered on irrational, and likely took its toll on Under Armour's profit margins and maybe its (to a lesser extent) premium brand positioning. My local Marshall's has looked like an Under Armour store since Black Friday.
Deckers Outdoor (DECK) : Let's be real, we are having another warm winter. From recent stories of the North Pole melting due to record warm temperatures and a lack of snow across the country, it's clear Mother Nature isn't making it easy for apparel and boot sellers. Couple this factor, which is causing high levels of discounting in stores, with people continuing to favor athleisure styles (which fosters purchases of sneakers as opposed to boots) and it's hard to say Decker's will hit its full year earnings guidance (which it cut in October).
Winners
Polo Ralph Lauren (RL) : The company's inventory plunged 15% from the prior year in the most recent quarter, as new executives are pulling the clothes from unprofitable department store locations. In turn, that is leading to less inventory in the off-price channel. The goal of doing this is getting Polo back to being viewed as a more premium brand.
I think the efforts were definitely on display this holiday season -- the off price stores weren't overrun with Polo gear and department store floors weren't swamped with merchandise. In some cases, stores that once had Polo shops no longer had them. Although it's too early to buy the stock, it's important to see the company's transformation starting to gain traction. It's going to take a few more quarters, but the ship is turning.
Starbucks (SBUX) : Do I continue to have concerns that the law of large (sales) numbers have caught up to Action Alerts PLUS portfolio name Starbucks' important U.S. business and the Street hasn't adjusted? Sure. Do I think the company has a ton going on now (which could weigh on execution), more so than the norm? You bet. But in the end, it was likely another strong year for Starbucks gift cards --and that could prove quite helpful in getting new rewards members ahead of the start of suggested selling.
The importance of this launch shouldn't be discounted -- the ability to jump inside a person's brain and suggest items you basically know they like is powerful. Also, the company has had steady stream of new products (mostly in coffee) out this holiday season that could have caused people to trade up during their daily visit.
