Holiday sales have outpaced expectations so far for U.S. retailers, but stock pickers still see several retailers, including Wal-Mart Stores
The reasons range from making bad merchandising bets to not discounting enough early in the season to being out of step with fashion, analysts and investors said.
Wal-Mart converted garden centers in more than 2,000 U.S. stores to temporary toy sections just last week as part of an 11th-hour push to win last-minute holiday shoppers.
They are clearly playing catch-up too late in the game, said Craig Johnson, president of Customer Growth Partners, adding that the No. 1 retailer has lost out to smaller rival Target Corp
Wal-Mart said they (will) have a Christmas of socks and underwear, and that's what has been the case, he said. On the other hand, Target has had an exceptionally strong season. They are operating on all cylinders.
Best Buy is Target, Costco
CONSUMER FEELS BETTER
Best Buy is also being challenged by online sites such as Amazon.com
The holiday season started off with a bang as consumers flocked to stores on the day after Thanksgiving. As a result, the National Retail Federation and others raised their expectations for holiday sales.
The American consumer feels a little bit better (but) she still needs the bargains, Patty Edwards, chief investment officer of Trutina Financial said.
Both Talbots Inc
It's not your mother's Talbots, it's your grandmother's Talbots, Edwards said, stressing that many of its recent ensembles look cheap or are completely out of vogue.
American Eagle is in a sticky spot.
American Eagle can't compete on a price basis with Aeropostale
The prospects of booksellers like Borders Group Inc
They are a vanishing breed. And that's a question, who is going to make it to the exit first?, Johnson said. Buy a book there, but if you want to return it, don't wait too long.
High-end stores Tiffany & Co
Many investors now also like Coach Inc
Despite its high valuation, investors still like Tiffany's stock. Tiffany trades at 20.4 times its forward earnings, while Coach trades at a multiple of 18.
Bloomingdale's, which is Macy's
But even at the high end, some stores are struggling.
Despite strong November sales at J.C. Penney
I am not convinced that Penney has had a strong month so far, Johnson said. A rising tide will lift all boats, but I don't think they did as well as say Macy's on the one hand, or Kohl's
ABERCROMBIE CUTS PRICES
Based on channel checks, Nomura analyst Paul Lejuez said Abercrombie & Fitch
Promotions seem to be working, but they are not extreme and Abercrombie has the easiest comparisons in our universe, Lejuez said.
Some like Kravetz also see good prospects for AnnTaylor Stores Corp
Kravetz, who does not own shares of any of the companies mentioned, is choosing to play a watch-and-watch game while investing in retail this year.
We think now is a tricky time to be an investor in retail, he said. Let the dust settle.
(Reporting by Dhanya Skariachan; Additional reporting by Phil Wahba and Martinne Geller; Editing by Kenneth Barry)