Wall Street types aren't always the most fashionable. Wearing business attire each day can leave you out of the loop on what the rest of the world is wearing.
However, an ear to the ground on the runway rather than the trading floor could be the key to catching the retail stocks that are on their way up rather than down.
In recent days, sales of apparel retailers such as PVH Corp. (PVH) , The Gap (GPS) , J.Jill (JILL) , and Canada Goose (GOOS) have led retail to its most bearish earnings season since the Great Recession.
Each of the aforementioned stocks are leading the way down, dropping double-digits year to date, with a J.Jill posting a staggering loss of nearly 70% since Jan. 1.
While many of the retailers blamed weather or recent tariff concerns for their big losses, the months-long stock trend suggests there is a more prescient factor: their offerings aren't "in."
"The customer voted against the product line," J.Jill CEO Linda Heasley said during the company's conference call question and answer session on Thursday, essentially summing up the key issue.
Even when the companies attempt to cash in on consumer trends, such as athleisure, that can falter due to brand specificity. For example, while Athleta was noted by Gap management as a key area of focus and growth opportunity, comparable sales showed deep deceleration from prior quarterly reports.
By contrast, lululemon athletica (LULU) stock is up double-digits year to date on the strength of its sales, including a big jump on its first-quarter report that saw revenues leap 26% year over year.
While there is concern among analysts that the stock is stretching its valuation as it charts at about 6.5 times sales, the dichotomous trend in LULU against its older peers lays out the importance of consumer trends in shaping the retail market rather than traditional fundamental analysis.
The luxury market and its influence on sales has been much the same. LVMH (LVMUY) , the maker of Louis Vuitton, Christian Dior, and Givenchy among other flashy brands, has been a stalwart in luxury retail.
It's ever presence as a status symbol in culture and importance to social influencers have made it largely resistant to retail sector trends.
HSBC analyst Erwan Rambourg called it "Too Bling to Fail" in a recent note, highlighting its ability to perform amidst the noise.
"The game changer has been the emergence of technology, which increasingly allows brands or groups investing the most to influence consumer choices, notably thanks to a stronger presence on social networks and a more effective consumer engagement," he explained. "This should benefit Louis Vuitton and other sizeable brands belonging to the LVMH group."
At nearly 4 times price to sales, it has received much the same criticism that lululemon has received for its comparatively cheap products. Much the same, the valuation and technical concerns have mattered little for the stock trend as it continues to march to an over 30% gain year to date.
For those looking at Gap's dividend or the price-to-earnings multiple of PVH, from a traditional stock analysis perspective, you've likely been burned.