The U.S. economic landscape is still experiencing the negative effects of a massive bubble's ugly hemorrhage. Consumers' shut wallets are yielding shuttered storefronts; retailers that are vacating the premises go far beyond the empty storefronts Borders' bankruptcy has left behind.
Take perennial struggler Gap
Another primarily mall-based retailer, Abercrombie & Fitch
Home-improvement retailer Lowe's
Investors need to choose their retail stocks carefully, and think long and hard before putting their hard-earned money into companies that are closing stores, marking their over-zealous expansion in the artificially inflated pre-2008 economy.
Although these store closures could improve these companies' short-term profitability, long-term investors must think twice. Is true long-term business growth still achievable for companies that are cutting back on their physical presences?
Investors should focus on retail stocks that are holding strong in the current tough consumer environment, and even better investments are the retailers that can grow their store counts for continued shopper demand. Take Whole Foods Market
Don't forget that stronger and up-and-coming retailers may also be able to achieve more profitable growth by negotiating cheaper rent.
Store-closing retail stocks like Gap, Abercrombie, and Lowe's simply don't look like appealing investments right now. Focus on strong retail stocks with future growth ahead, or steer clear of the retail universe.