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WMT-  headline doesn’t tell the whole story.  US comp was a little light, lower tax rate added about 2 cts which allowed them to print an inline #, inventories came in high, up 7% vs. sales up 2.6%.  mgt also indicated avg ticket declined- the first time we’ve seen this in a long time.  Recall that my negative thesis is one predicated on lack of pricing power and this is a clear example.  Street all bulled up on guidance which is a few cents ahead of estimates for 4Q, but mgt did little to explain the components of the guidance.  In other words, a low quality qtr with likely a low quality reason why their 4Q is slightly more bullish. 

HD- clean beat on a much better comp relative to LOW.   1.4% comps for HD, 0.2% for LOW.  Indicated nov is off to a good start and guiding 4Q to a LSD increase.  Again this one looks much better than LOW given they have greater control over their own destiny (at least for now).

TJX-  beat the pre-announced number by a penny but guidance is the issue here.  Guiding to down 1-3% comps and a range of eps just below the street for 4Q.  not terribly surprising given their conservatism, but they haven’t been massaging lower much over the past couple of years.  They are stepping share repo for next year.  All in likely a muted to negative response as things are finally slowing, albeit a slow pace.

ANF-  beat by 5 cts, but inventories are still up huge.  Up 64.5% vs. sales up 18%.  Gm’s down yet again, sg&a in control as sales did pick up sequentially. All in still concerned with inventories. 

JWN- probably the most inline of all of the reporting retailers today.  Only call out here is the conservative guidance of 2.60-2.65 with the Street at 2.65.  implies a lowering of 4Q despite a slight beat on 3Q.  Typical conservatism here.  Inventories still in decent shape, sales up 11.7% vs. inventories up 9.6%.

URBN- relief rally here on the inline print.  Street was very concerned about a miss and slowing trends.  It appears business picked up towards the end of the qtr after a very slow start. This gives mgt confidence in their outlook which assumes a similar sales trend to 3Q at up 4-5%.  In the absence of the miss, many people looking to get long one of the better growth names in the space.

Eric Levine


US Retail