It's deja vu all over again. February retail sales arrived Thursday, and the numbers look pretty familiar.
For the fifth straight month, retail sales overall took a dip year over year. Saks (NYSE:SKS) and the rest of the luxury sector is still in shambles. Teen shoppers are still MIA at American Eagle Outfitters (NYSE:AEO) and Abercrombie & Fitch (NYSE:ANF). Families continue to flock to BJ's Wholesale (NYSE:BJ) and fellow discounters to stock up on necessities. And The Buckle (NYSE:BKE) and Aeropostale (NYSE:ARO) wowed again with seemingly out-of-place double-digit positive comps.
|
Company |
February Comps |
|---|---|
|
Saks |
(26.0%) |
|
American Eagle |
(7.0%) |
|
Aeropostale |
11.0% |
|
Abercrombie & Fitch |
(30.0%) |
|
The Buckle |
21.0% |
|
BJ's Wholesale |
8.2%* |
Source: Company releases.
*Figures exclude fuel sales.
The chart above highlights a few bright spots in the retail report. In reality, though, these are outliers -- the bulk of the retail sector is unfashionably hideous. The aspirational shopper is in hibernation. American Express (NYSE:AXP) is bribing some of its customers with $300 payouts to stop shopping and cut up their cards. And fiscal responsibility looks to be the next big thing -- total savings rose to an annualized rate of $546 billion, the highest level on record.
In other words, the consumer is on one giant spending hiatus right now.
Tough times are upon us, and retailers have taken the brunt of the severe economic downturn. In the near term, the rapidly decelerating sales trends could be lethal to financially burdened retailers, particularly ones that have highly leveraged balance sheets. And February's sales are unlikely to be the worst of what's to come.
However, I would like to paint a rosier picture for retail investors with very long investment horizons -- with a big emphasis on "long." Current performance in the retail sector and fear of what's to come has left most retailers lingering at prices that would put any clearance rack to shame. Right now, investors should sift through these retailers and select those that are financially sturdy and possess resilient brand power.
Keep in mind that many retailers are in a slump for more reasons than simply the struggling economy, and so they may not recover even when the economy turns around. However, many retail stocks are positioned to make great comebacks when consumers start trekking back to malls and shopping centers.
Shop wisely, Fools.
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