• Investing Insights & Exclusive Offers → Get Our FREE “Market Brief”
    Sign-up for our free weekly newsletter. Get unparalleled investing insights and exclusive Summer Sale discounts on Hedgeye research.

    Disclaimer: By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails. Use of Hedgeye and any other products available through hedgeye.com are subject to our Terms Of Service and Privacy Policy

Today's 4%+ comp numbers hide how bad things are in apparel land. While the numbers appear consistently bad with 6 out of 7 consecutive down months, they were down 13 months ending Nov 1991, and 16 months ending June '03.


Thank you Wal*Mart. You're the only thing that came remotely close to keeping the RTH's head above water today. The MVRX (a better gauge for the apparel retailers as it is equal-weighted) was down a whopping 3.49%. But with the help of a 5.8% ex-gas comp, WMT was ONLY down 80bps.

Were sales results bad? Yes and no. In aggregate they were actually pretty dang good - up about 4.5% with a 70bp acceleration in the 2-year run-rate. Yes, there was a lot of noise around weather, rebate checks and calendar. But overall, these numbers are not recession-like at face value.

But the bifurcation between sectors is very hairy. Discounters' comps are ramping meaningfully, which is largely due to food inflation, and to a lesser extent, the consumer trading down on discretionary items. But the department stores and apparel retailers were flat-out awful, with nearly every one missing plan.

Here's an interesting stat for you. Apparel comps are down 6 out of 7 months in a row at an average rate of 5.1%. Sounds big, huh? But we also saw negative comps for 16 months straight (March '02 'til June '03) at an average rate of 3.3%, and for the 13 month period ending November 1991 (avg 2.0%). I'd argue that the consumer is in worse shape today, and for the next 2 years, than in either of those periods.

I'm not holding my breath for this to reverse course anytime soon.