9 Reindeer of Retail

To celebrate the holidays, we here at the Fool are devoting extra virtual ink to all things consumer-focused in a special section called "The 12 Days of Christmas." Over the coming week, we'll have our "12 Days of Content" surrounding consumer-focused names that look set to profit or perish from the holiday cheer.

You can't "ho, ho, ho" without the reindeer that make Santa's sleigh go, go, go.

Of course, you know the truth about Santa. All of us "Santas" are out in the malls taking part in the maddening rush for toy hamsters. But there's no harm in playing some reindeer games. I figured I'd take the eight legendary reindeer, tack on Rudolph for good storybook measure, and cast retailers as Santa's antlered delivery force.

Amazon.com (Nasdaq: AMZN  ) : Dasher
Amazon earns its speedy reindeer moniker two ways. The first, of course, is that Amazon has established itself as the reliable brand in e-tail. A recent Zeta Interactive study finds that an overwhelming 88% of the Amazon.com mentions in cyberspace are positive posts. The retailer's Prime membership program -- for which frequent shoppers pay $79 a year for "free" two-day shipping on all Amazon-stocked wares -- is simply target practice to make sure it consistently delivers on time.

The other reason for claiming the Dasher nameplate is the company's speedy growth. As big as Amazon may be -- and in the thick of a global recession, no less -- Amazon.com continues to stun skeptics with its gains on the top and bottom lines.

Net sales climbed by 28% in its latest quarter. Margins exploded, enough to give the company a 68% profitability pop. Now that's fast.  

Abercrombie & Fitch (NYSE: ANF  ) : Dancer
Shoppers are avoiding Abercrombie & Fitch these days. Comps fell by a whopping 17% last month, even though sales at its consumer-direct business inched higher.

This isn't the kind of trend an investor likes to see heading into the telltale holiday season, but it's hard to give the Dancer crown to anyone other than A&F, with its scantily dressed catalog models cavorting about.

lululemon athletica (Nasdaq: LULU  ) : Prancer
As a rapidly growing chain of high-end fitness apparel, lululemon suits up yoga enthusiasts and other well-to-do shoppers who enjoy prancing around in cozy workout gear.

Revenue soared by 30% in its latest quarter, fueled by concept expansion and a 10% spike in comps on a constant-dollar basis. Earnings grew at a staggering 60% clip, so obviously, lululemon wasn't marking down its fancy fitness duds to move product.

Limited Brands (NYSE: LTD  ) : Vixen
It's hard to get sexier than Limited Brands, the company behind the 1,638 Bath & Body Works and 1,043 Victoria's Secret stores.

Selling bathing supplies and lingerie was a tough gig during the recession, but Limited is starting to bounce back. Bath & Body Works and Victoria's Secret posted positive comps of 4% and 3%, respectively, last month.

The year certainly didn't start out positive for Limited. Comps through the first 43 weeks of the fiscal year are off by 5%, but Limited Brands' same-store sales had fallen by 8% year-to-date at this point a year ago.

Hot Topic (Nasdaq: HOTT  ) : Comet
When I think of comets, I envision rare flashes of brilliance between interminably long periods of darkness. Step up, Hot Topic. The fringe goth and emo kids found mainstream success with the Twilight series, and suddenly, everyone wanted to don dark clothing and be a vampire.

The comet crashed, of course. Hot Topic's bright streak of breakthrough comps turned negative again earlier this year -- but that probably pleased the doomsayer emo kids.

Blue Nile (Nasdaq: NILE  ) : Cupid
When you specialize in selling diamond engagement rings online, you were born to play Cupid.

As you can imagine, recessions are tough for high-end jewelers. Discretionary income is hard to come by, and realistic couples simply push off plans to tie the knot. However, that's perhaps the best reason to pay attention to Blue Nile for the inevitable pop in popping-the-question sessions.

Unfortunately, you may be too late to be fashionably early. The stock has already more than tripled off its January lows.

Zappos and Limited Too: Donner and Blitzen

As the thunder-and-lightning duo of Santa's team, I figured I'd go for two climate-rattling retailers that both drew enough attention to get acquired this year.

Limited Too offered a stranglehold on the tween girls' clothing market, a niche that Dress Barn sought out in its quest to reach a younger demographic. Zappos is the online shoe seller with a cult following so impressive that Amazon.com had to buy it.

Wal-Mart Stores (NYSE: WMT  ) : Rudolph
This one was easy. Sure, Wal-Mart has its critics, but the world's largest retailer is the all-weather bright spot -- get it? -- that leads the sleigh.

Wal-Mart has held tough during the recession, as shoppers turn to the discounter for bargains on wares and a growing slate of groceries. It's also the best bellwether for the retail industry.

Wal-Mart, you'll go down in history.

Care to recast any of my choices? Have at it in the comment box below.

Follow along with our "12 Days of Christmas" article series:

Blue Nile is a Motley Fool Rule Breakers selection. Amazon.com is a Stock Advisor pick. Wal-Mart is an Inside Value selection. The Fool has an options position on Abercrombie & Fitch. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz always believes in being fashionably early, but he owns no shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 17, 2009, at 4:35 PM, madmilker wrote:

    with more and more people of the world reading "The Flow of Trade in a Global Economy" by Lance Winslow. There is one quote from his article tat comes in mind. "Now let us look at Wal-Mart again; you buy a product there, 6% goes to the employees, 10-18% is profit to the company, 25% goes to other costs and 50% goes to re-stock or the cost of goods sold. Of the 50% about 20-25% goes to China, a guess, but you get the point. Now then, how long will it take at 433 Billion dollars at year for China to have all of our money, leaving no money flow for us to circulate? At a 17 Trillion dollar economy less than 40-years minus the 1/6 they buy from us. Some say that if we keep putting money into our economy, it would take forever, but if we do not then eventually all the money flow will go. If China buys our debt then eventually they own us, no need to worry about a war, they are buying America, due in part to our own mismanaged trade, so whose fault is that? Not necessarily China, as they are doing what's in the best interests, and we should make sure that trade is not only free, but fair too."

    Also, think for a moment about George Washington....yes the man tat is on the US dollar bill.... "Washington had been reelected unanimously in 1792. His decision not to seek a third term established a tradition that is now embedded in the 22d Amendment of the Constitution. In his Farewell Address of Sept. 17, 1796, he drew on the results of his varied experience, offering a guide for both present and future. He urged his compatriots to cherish the Union, support the public credit, be alert to the “insidious wiles of foreign influence,” respect the Constitution and the nation’s laws, abide by the results of elections, and eschew political parties of a sectional cast. Asserting that the United States and Europe had different interests, he declared that it “is our true policy to steer clear of permanent alliances with any portion of the foreign world,” trusting to temporary alliances for emergencies. He also warned against indulging in either habitual favoritism or habitual hostility toward particular nations, lest such attitudes should provoke or involve the country in needless wars."

    Take the time to read his farewell address after only eight years of serving his country and than ask yourself tis....How do you think George feels being sent overseas in return for all tat foreign so-call cheap items and being left in a foreign bank because the American worker doesn't make anythig for the foreigners to buy. Cheap items didn't make tis great union of 57...oops! 50 states the greatest place on the face of tis Earth.....the American worker (union and non-union) did.

    You can't have a strong country without having a strong currency and you can't have a strong currency unless you keep it floating around within your 50 states. Tis is why the store with the star in the name puts 95% China made items in their stores in China....to keep their "yuan" in their country helping the nice people there. And with only 5% left for all the other 182 country's tat make stuff including the United States of America....tat doesn't produce very many jobs outside of China.

    Being an old person myself and knowing how it wus back in the 40's, 50's and 60's in tis union of 50 states....I look at George each time I pull him out of my billfold and make a promise to send him out for items made in America so after floating around helping each hand he touches jus maybe one day he will shake mine again.

    ------------------------------------------------

    don't know bout the going down but do know it's gone in Germany and South Korea.

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