Shares of the old-line division retailer operator noticed their worst trading day ever after Macy’s reported decrease vacation gross sales for the top of 2018 and slashed its earnings outlook for the 12 months. Administration particularly highlighted girls’s sportswear, sleepwear, trend jewellery, trend watches and cosmetics as areas of weak spot.
“It gave you the impression of a broad-based slowdown in shopper spending,” Cramer mentioned on “Mad Money.”
However after seeing sportswear retailer Lululemon raise its fourth-quarter outlook, shopper expertise big Apple get supply-constrained for its increasingly popular Watch, and price-conscious corporations like Amazon and Ulta Beauty seize on selling affordable makeup, Cramer began to assume that Macy’s weakness was company-specific.
“Put all of it collectively and it makes me assume that Macy’s has some distinctive points that merely do not mirror what is going on on in the remainder of retail,” he mentioned, including that PVH, the attire producer that sells its merchandise in Macy’s shops, not too long ago issued a positive pre-announcement of its quarterly outcomes.
That is why traders cannot all the time have a look at the retail sector as one bucket of comparable corporations, the “Mad Cash” host mentioned.
“To me, the true takeaway from the Macy’s insanity is that you have to go class by class,” Cramer defined. “Once you try this, you understand that retail is not a shedding ETF, it is a sector with each winners and losers. If you wish to attempt to generate profits by choosing shares, you want to have the ability to inform the distinction.”