Retail Earnings ‘What A Disaster’
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The Mother of All Bubbles is so pervasive that even Retail companies doing things right are worth shorting right now.
Case in point: Costco (COST). The company’s March sales were only “borderline negative” thanks to food demand, but consumer purchases slowed dramatically on discretionary items.
“The headwind for consumers is they have to spend less elsewhere, and more of it has to go to food as a share,” explains Hedgeye analyst Daniel Biolsi in this clip from The Call @ Hedgeye.
Another retailer, Buckle (BKE), has been lauded by Brian McGough for its merchandising, but also had a big deceleration in March.
“Buckle probably is a short because most of retail will be until we get through this consumer slowdown,” explains Hedgeye’s Retail analyst. “People want to be buying these stocks. They’re like, ‘No, it’s already priced into the stocks.’ Well, let’s see how Buckle trades.”
“You want to be long your bag-holding retailers yesterday,” adds Keith McCullough. “What a disaster. The ISM services number was horrendous because the March numbers are terrible. You’ve heard it on The Call every day in March. Newsflash: it’s April.”