Retail Stocks Rip Higher on Bullish Commentary

An analyst from Cleveland Research had some positive things to say about Kohls and retail in general today.

Warmer weather helped same-store sales improve by a “decent amount” in late May and early June, analyst Matthew Delly said Wednesday in a note. While Cleveland Research is cautious on Kohl’s for the long term, the brightening trends could help Kohl’s meet analysts’ consensus projections for the current quarter.

Moreover, there’s a retail conference taking place today at Piper Jaffrey. The notes out of JC Penney were very bullish.

Via Briefing.com

11:20 | JCP | (8.63 +0.61)
J. C. Penney at Piper Jaffray Conf.
Memorial Day weekend was positive; feel good about position.
Discretionary spending is being hampered by uncertain macro.
Appliances:

JCP will not own appliance inventory, just what’s on display.
Appliance floor space took over worst performing segments… Appliances are significantly more profitable

Major competitor is donating share in appliances — likely a reference to Sears (SHLD) as HD, LOW and BBY are all doing well in the space.

Now that JCP is gonna sells washer and dryer combos to seniors, all is well.

JWN had something to say about recent trends too.

Multiple factors driving softness in retail, which started ~mid-Aug 2015: Shift in consumer spending towards housing and away from apparel, somewhat cyclical. No new fashion trend. E-commerce also taking share.

Online offerings are doing well (now 20% mix).
Now learning about how to be more profitable in e-commence
Growing off price/online.

Committed to investing in technology, the ‘new mall’.
Co cut inventory plans.

Competitor’s marketing has become transnational, JWN not interested in that.

Close to one million phone numbers in new loyalty program in less than one month.

Flagship Michigan Ave (Chicago) store as robust as ever (co installed a bar on the second floor).
Trunk Club is doing well.

Nordstrom Rack/Haute Look is a great clearance channel. Targeting 270 Rack locations (down from 300) by 2020 due to expansion in online. Rack model is flexible and attractive, attracts people to JWN brand.

Testing economic partnership with Tesla (TSLA) in one store, with a Model X on display (attempt to drive traffic).
Excited about oppties ahead.

Couple that with the fact the sector had been extremely oversold and you’ve got a rally on your hands.

I noted yesterday in Exodus that the overbought/oversold oscillator was very oversold.

The mall is still dead, though.