Employment is clearly the hot topic in the market today. Yes, the aggregate unemployment rate matters, but as noted in my 12/2 post (US Regional Economics: It Matters… A Lot) we need to look at which states are seeing the greatest sequential changes in employment trends. We all know that markets like California, Florida and Nevada have been tough – but the key today is that the next round of states are starting to roll over.
We took our analysis a step further and looked at every retailer in the US with more than 5 stores – public and private – that sells apparel/footwear. We weighted each company’s store portfolio with the incremental change in employment by state.
We grouped them into three groups 1)The Good, 2) The Bad, and 3) The Ugly. I wasn’t thrilled with the Clint Eastwood metaphor and pics below, but my Analyst Zach Brown is a big fan, and he did such a dang good job on this that I had to give in.
The charts below (click to enlarge) speak for themselves, but here’s a few quick callouts.
1) Out of the 80 companies plotted, Liz Claiborne retail has the lowest risk on the list, while Jones New York comes in dead last (highest risk).
2) Department stores, and anyone with heavy mall exposure were right in the middle of the pack. Not a huge surprise, given the lack of regional focus.
3) But Sears??? Near the top of the ‘safe’ list?? That one surprised me.
4) TJX at the safe end, and Ross Stores polar opposite?
5) VF Corp retail is way up the list too. But retail is such a small percentage of total company sales such that this does not help the fundamental story much.
6) Skechers looking really bad.
7) DSW – an ultimate zero – is on the risky list too.
We have this analysis run for many companies that are not listed on the charts below. Ping me or someone on my team for assistance.