In the wake of economic slowdowns, we have seen retailers offering discounted goods for cost-conscious consumers. But despite the stock market becoming more robust and real estate markets coming back, high-end retailers and product companies are not doing much better in the current market.
It seems that even the well-off are nervous enough about the economy to keep their wallets in their pockets and resist the urge to spend. Fortunately, Portfolio Grader can help you see how bad the damage is, and whether there are any diamonds in the rough.
Among the high-end department stores, Nordstrom (JWN) is rated a “sell” by Portfolio Grader, while Saks (SKS) is a “hold” due to the pending takeover offer from Hudson’s Bay (HBAYF). Tiffany (TIF), home of the little blue box that gets husbands out of trouble, is also rated “C,” and is just a “hold” in the current marketplace.
Suppliers to upper-end stores are not faring much better right now. Coach (COH) makes high-end purses and accessories for women, and business has been struggled lately. Revenues have been flat and earnings estimates for the rest of the year declined in recent weeks. The stock is rated a “D” right now and remains a “sell.”
Ralph Lauren (RL) is not doing any better. The company sells men’s, women’s and children’s clothing and accessories through department stores operating in 379 stand-alone retail stores and outlets. Analysts who follow the company have been steadily lowering the estimates for the next two quarters. This stock was downgraded to a “D” by Portfolio Grader back in June and remains a “sell.”
The high-end grocers are not doing much better in the current economy. Both Whole Foods (WFM) and The Fresh Market (TFM) offer groceries that appeal to higher-market consumers, who appear to be being more cautious about their grocery bills at the moment. Both were downgraded to a “D” in the past week and should be sold.
Williams-Sonoma (WSM) has been bucking the trend for high-end retail products. The company sells culinary and entertainment products as well as select home furnishings. They also operate the very popular Pottery Barn stores for home furnishings and accessories. Operating in 44 states; Washington, D.C.; Canada; and Puerto Rico, the company has posted four consecutive positive earnings surprises and analysts have been increasing their estimates for the rest of this year and 2014 in the past month. The stock was upgraded to a “B” earlier this year and remains a “buy” at current prices.
Apparently, when it comes to spending money during uncertain economic times, the rich are not all that different from everyone else.
Louis Navellier is the editor of Blue Chip Growth.