Yesterday investors saw yet another shot across the bow as Wal-Mart, J.C. Penney, and Federated Department Stores all said that business in April was worse than expected. The real keys to consumer spending are women, and when Liz Claiborne reported missed earnings and warned about the next quarter, this tells me consumers are beginning to pullback.
Retailers that sell to women and teens will be the first ones on my shopping list. My logic here is very simple; women love to shop and look attractive, and teens are trying to look "sexy" to attract one another. I realize this is a generalization, but the buying habits of these two groups have driven retail sales through the roof over the past 10 years. If we had to rely on men to drive sales, clothing retailers would be incredible shorts.
Click on the links below to see the various charts on retailers for women and teens;
Retailers for Teens & College Kids
While we would all like to know where the bottom is in any stock, I think accumulating positions in some of these key retailers on pullbacks of 20% is a smart move. If they happen to go lower, dollar cost average your way in.
The thing I really like about these retailers is the high profit margins of their products. Many of these products are made overseas at a very low cost, and then sold to U.S. consumers at a very high price. How can you beat that?
