TheStreet.com's Jim Cramer says like most other retailers, Sears and Wal-Mart are "overstored" and need to retrench.Retail won't work until we get more cuts. Usually, it would kick in soon, and I do believe we will look back at this period and wish we had done some buying. But what the retailers haven't done yet is retrench.
We all know the problems with Sears (NASDAQ: SHLD) (Cramer's Take). It hasn't spent enough and it is hostage to the housing crisis. But it hasn't closed the stores and circled the wagons. Home Depot (NYSE: HD) (Cramer's Take) and Lowe's (NYSE: LOW) (Cramer's Take) are still opening stores. Most of the retailers are expanding.
This is just a mistake. And until it is rectified, we will have a hard time getting out of this retail morass. We are simply overstored, whether it comes to the home improvement chains, the big department stores (Macy's (NYSE: M) (Cramer's Take)), the dollar stores (99 cents), the teen apparels (all of them) and the housewares (Williams-Sonoma (NYSE: WSM) (Cramer's Take)). There are too many Talbot's (NYSE: TLB) (Cramer's Take) and AnnTaylors (NYSE: ANN) (Cramer's Take). Way too many Office Depots (NYSE: ODP) (Cramer's Take), Staples (NASDAQ: SPLS) (Cramer's Take) and Office Maxes (NYSE: OMX) (Cramer's Take). Too many Wal-Marts (NYSE: WMT) (Cramer's Take) and Targets (NYSE: TGT) (Cramer's Take).
We have a glut. I can't believe that we aren't hearing about store closings. These companies are unrealistic. In a real retrenchment, they should be closing more stores than they are opening. That hasn't happened.
Until it does, and until we get the Fed's rate cuts and until we analyze these easy compares, the road remains rocky even as it shouldn't, given the history of the group and rate cuts. I know I am a big believer in patterns and have said this group can be accumulated. That's looking wrong and early right now -- unless we get these fixes, pronto.
Random musings: I have been puzzled about the reaction to Aecom (NYSE: ACM) (Cramer's Take) ever since the "reduced estimates" story was refuted on Mad Money by my interview with the CEO. I am now coming around to the idea that the company does too much domestic infrastructure linked to bond issues, which are going to have a harder time as insurance becomes tougher to get and belts get tightened. That's the real reason I think it hasn't rallied.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Sears Holdings.
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Reader Comments (Page 1 of 1)
11-30-2007 @ 9:51AM
Linda said...
Jim, everything you say rings true. Nevertheless, business decisions are made by real people. That impelled me to wonder who was making the decisions at Sears. Thursday’s NewsVisual article on Sears Holding Corp’s Board of Directors http://www.newsvisual.com/newsvisual/2007/11/did-inexperienc.html#more examines the members’ level of corporate connections, and it implies that they fall short in that category. They are also relatively young, at least if you compare their average age to other corporate boards. So I wonder about the human factor.
11-30-2007 @ 11:08AM
Alex said...
Probably selling real estate is an option but at what price? Who is the buyer? another retailer? another mall will abandoned stores? We are going back to the same vicious circle. Operational discipline maybe is the answer or much better a cost analysis. That is what SHLD has not found yet. I have been seeing advertising about 5 minutes guarantee or 5 dollar. I am just wondering how much money is spent on that ( aprox. $864,000 per month/ 900 stores, 6 coupons daily on 30 days). The average retailer does not put times on pick up merchandise and it takes around 10 minutes to have the merchandise out for the customer. Go to any Sears store and ask for a reduction because the box has dust on top, for sure if you push enough you will have a reduction. The last thing that I found new signing at the Sears store for the in vehicle pick up. You call from your car and they bring you the merchandise. How much money has been spent on signing, phone systems and changes in the system to make this work. In the name of customer service SHLD is wasting money instead of providing just that "a good customer service": friendly associates, keeping promises, offering clean stores and a good price/quality relation "priceless".
11-30-2007 @ 11:25AM
chet alexander said...
You people in the market are always complaining. Let the system run it's course. We are suppose to be running under the free enterprise system not buying out the Fed so they can shore up the money changers that run the thing. As soon as the dumb mistakes catch up with wall street they all cry for the Fed to bail them out. Just print more money and everything will be just great. We did'nt learn a thing from from the previous Fed chief who gave away free money.
12-03-2007 @ 6:15AM
god damn cramer said...
i just want to thank cramer for pumping shld all the way down to 100, and now dumping it. i hope you are satisfied.
12-07-2007 @ 8:53AM
Gr33ngurl said...
"In a real retrenchment, they should be closing more stores than they are opening."
Here here. Especially in the case of Wal-Mart. Not only is there square footage glut, there are also hundreds of mismanagement problems at the fundamental level. Whether it is how their Chinese suppliers, or the way they treat employees, and even their public image, Wal-Mart needs to hold on the new stores and better manage the ones they have.
Reminds me of what my mom used to say when I wanted more: "you don't take care of the toys you have, why would I let you get more?" (or something like that :-)
12-24-2007 @ 3:01PM
David said...
Cramer,
This stock finally completed making a bottom. Nice W made and the stock is ready to trend higher. There are over 40 points to the upside waiting for you in 2008, don't miss the boat.
D Lesh