Retail Bag Check

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I'm starting to wonder whether Chico's (NYSE: CHS) might start turning things around after all this time. Crazy, I know.

Last weekend, I met a friend for lunch at one of those lifestyle centers where people can shop, eat, or hang out and chat with friends. We ate our lunch outside, and I couldn't help spying on the shopping bags of passersby. Chico's was by far the standout.

I'd say Chico's bags outnumbered neighboring rival Talbots' (NYSE: TLB) bags by about five to one. Meanwhile, I only spotted a few bags from other nearby retailers, like Williams Sonoma (NYSE: WSM), Gap's (NYSE: GPS) Banana Republic, and Limited's (NYSE: LTD) Victoria's Secret.

I know -- completely anecdotal and extremely unscientific. However, as Peter Lynch preached, observation can be a very important first step in stock research and analysis; I'm a big believer in trying to understand the stories behind the numbers by, you know, noticing things, like how hardly anybody goes to Sears Holdings (Nasdaq: SHLD) anymore. (Ahem.)

I recently put an "underperform" on Chico's in Motley Fool CAPS, but I got cold feet and ended it yesterday, given my growing suspicions that it might not stink as bad as I thought anymore. Meanwhile, Olympic uber-champion Michael Phelps' mom, Debbie Phelps, may be helping a lot too, since she's been sporting Chico's apparel during the Olympics and in recent media appearances.

Chico's didn't even hire Phelps to do that (although now they're in talks about signing her on in an "official capacity"), so talk about lucking out, since an Olympic champion's mom is undeniably wholesome and inspiring. (For a different example of unsolicited spokespeople, apparently Darden's (NYSE: DRI) family-friendly Olive Garden hasn't been too enthused with Playboy model Kendra Wilkinson's unbidden public advocacy -- take that as you will.)

Chico's quarterly results today looked pretty atrocious, with the keyword being something like "plunge." (I plan to take a closer look at its earnings and those of a few peers later this week.) Plus, I'm still convinced that mature females are among the most restrained shoppers when times are tough.

So yes, Chico's stock still makes me nervous. On the other hand, the light may be at the end of the tunnel of Chico's tough times. The mall may be a ghost town, and teen retail may be terrifying, but if Chico's can start turning itself around now, the retailer could rock some portfolios when consumers start spending again.

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