• 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
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • 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
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Jim Cramer: Here's What's Really Going on With Retail

We are going to have to differentiate retail and recognize that Wall Street tolerates nothing disappointing.
By JIM CRAMER
Jan 10, 2019 | 12:04 PM EST
Stocks quotes in this article: M, KSS, TGT, MA, AMZN, COST, DG, DLTR, AAPL, SHLD, JCP

How bad was retail really? The Macy's (M) hit was a serious guide down with materially lowered estimates. The period after Black Friday turned out to lay a bomb with some real weakness in some big categories: fine jewelry, women's shoes, fragrance, dresses, outerwear, active and home.

It's unfortunate and it could lead to some big promotions in the first quarter of this year to clear inventory.

But let's make another thing clear: Kohl's (KSS) and Target (TGT) , while not perfect, weren't nearly as bad as Macy's. Kohl's actually raised numbers, not lowered them and Target did pretty darned good.

One step further, these stocks are down so much that I think they reflect all the negatives and none of the positives. Macy's has erased almost its entire move from the bottom and now yields almost 6%. Kohl's stock is 18 points down from its highs and just 8 from its lows. Target's stock is off 22 from its highs and only up seven from its lows and yields almost 4%.

They can all safely be bought, I think, just as value plays, although we downgraded Kohl's this week for Action Alerts PLUS to a "Two" from a "One" because we feared that people would not like the holiday sales.

Now let's step back for a second and figure out what's going on here. We have some real cross currents. For example, Mastercard (MA) reported that holiday sales were up 5% year over year. We know that Amazon (AMZN) has been making noises about incredible numbers. Last night Costco (COST) reported a 7.5% comparable store sales number for December. We know that Burlington BURL is putting up some terrific numbers. Dollar General (DG) and Dollar Tree (DLTR) are killing it, even as the latter, bizarrely, is under siege from an activist hedge fund.

What does it all say? I think it says something so important for retail and for America, frankly, and that's if you are in the mall and you offer full-price goods -- as is often the case with Macy's -- and you aren't cooking with an omnichannel offering at a level that Wall Street likes, you got hammered in the stock market much worse than you got hammered at the actual company. That's why I say that you can buy the stocks of those outfits as they are oversold, but it might just be for a trade.

But if you offer a real bargain to consumers as is the case with Amazon and Costco or the dollar stores, you are clearly differentiated from the pack. Why is that happening?

Oddly, I see the wealthier consumer trading, not down, but different, since the Great Recession. The wealthier consumer wants a bargain and doesn't want to pay full price when they are buying gifts for others. Sure, they will pay full price for Apple (AAPL) goods; we know that the U.S. put up outstanding numbers and the watch and accessories lines -- total full price -- sold extremely well.

But Apple is the outlier.

Going forward I believe we are going to have to differentiate retail and recognize that Wall Street tolerates nothing when it comes to anything disappointing and is willing to extrapolate the worst to companies that even raised numbers, as Kohl's did.

It's a new economy, one that is driven by people being able to price compare on their cellphone and create a degree of discipline and scrutiny that every retailer must live with and adapt to or suffer the consequences, whether it be bankruptcy in the case of Sears (SHLD) , mortal wounds in the case of J.C. Penney (JCP) , or hideous stock declines on a not-so-hot guide down by Macy's.

Kohl's, Amazon and Apple are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells these stocks? Learn more now.

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, is long KSS.

TAGS: Investing | Stocks |

More from Stocks

Jobs and Sentiment Provide Solid Backbeat for Next Week's 'Dance'

James "Rev Shark" DePorre
Dec 6, 2019 4:37 PM EST

In one week we should know whether the Dec. 15 tariffs will increase as planned.

As Samsung and Others Push the Envelope on Camera Tech, Chip Suppliers Benefit

Eric Jhonsa
Dec 6, 2019 4:31 PM EST

Samsung's Galaxy S11 will reportedly have a very powerful rear-camera system. And rivals aren't standing still, either.

A Growing Dividend Stock With a Sweet 3.3% Yield

Bob Ciura
Dec 6, 2019 3:19 PM EST

Investors typically look to food stocks for stable profits and reliable dividends year in and year out.

Here Are 2 Fantastic Looking Charts

Timothy Collins
Dec 6, 2019 2:05 PM EST

Qorvo topped my scans and all cylinders are firing on Freshpet.

Jobs Numbers Jolt Both Bears and Bulls

James "Rev Shark" DePorre
Dec 6, 2019 12:40 PM EST

The recovery has now occurred so fast that the bulls did not act quickly enough and are again struggling with Fear of Missing Out.

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

  • 01:06 PM EST CAROLYN BORODEN

    MRK and LVS Targets Coming Up

    View Chart » View in New Window »  LVS View C...
  • 12:01 PM EST BOB LANG

    Rolling up Apple

    just the other day we added some apple calls on th...
  • 12:24 PM EST GARY BERMAN

    Fibocall: The SPX-Cash Long-Term View

    You will hear from many analysts on TV screaming t...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2019 TheStreet, Inc., 14 Wall Street, 15th Fl, NY, NY 10005

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