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Lazard Capital research analyst Jennifer Davis on the outlook for retail sales and the retail stocks for investors to watch.
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-- also -- on retail sales did you see this rising for a third straight month.
Jumping more than 1%.
In September you guys have been shopping.
-- Al -- fueled the -- -- expected lift in sales was on capitol research analyst Jennifer Davis joins us now also Jennifer thank you for being here.
Thanks for having me out of driving these better than expected sales why people coughing up the don't.
Well I think part of that was autumn and automobiles gasoline electronics.
But -- it -- -- -- even -- numbers looked good numbers look good.
-- consumer continues to spend.
I've -- -- don't benefit -- the American consumer.
Especially when interest rates are low and people are may be spending a little more on housing and that what goes inside the house but.
What continues to push this forward to -- at last all the way through the holiday season.
I think it does yes we're looking for -- -- a 5% increase in holiday sales this year.
Stabbed to death I think that the consumers gonna continue to spend and -- hiring companies Saks Neiman Marcus what's driving their sales right now.
So I don't necessarily like those stocks here.
High end consumer does remain.
Study I guess the ultra high end.
The aspiration all customer that kind of customer that you use to buy -- -- -- stretch to buy that if you try first let's say.
Has been weaker -- okay their sales haven't been quite as strong as they would be otherwise.
Also the European tourism is down so that's hurting their sales a little bit on the flip side.
As Chinese Brazilian and Russian -- -- ups partially offsetting that when you joined us in August you have no celebrating so you were very bullish that appears to have been pretty Smart call of what about now what do you love.
What do you do you have sell ratings now either in I don't have any don't okay.
Still love the gap I think -- -- -- here on on an August out of him up again incredibly well last year.
Still like limited think that there position for -- great holiday and American Eagle is undergoing a turnaround.
New management team -- I think is doing bringing a lot of discipline in the organization.
Consumers just unless it's 50% off these days they've gotten so used to -- sales have really does drive down margins are we gonna have to I think going to be -- -- retailers -- to really.
Backlit out in the discount world.
So -- there's a couple things going on this your first of all cotton costs are down thinking.
Almost 50%.
So that's helping their margins there and then secondly inventories are more in line this year than they were last year with sales trends.
So there's not the need for.
As deep discounting as there was last -- -- will we see those leading into a holiday season as much or people ponying up this movement that so much money for up.
And I fox -- I know discounted all the iPhone 5 as a -- unique imprint on -- Giving apple and some other apparel people do like that feel like they're getting a bargain and so you -- you will see promotions but they'll be planned promotions so retailers.
Plan on being 20% offer 30% off and that's built into their margin.
Structure.
So -- you say that's gonna be a good holiday season so bottom.
-- I don't see a huge improvement in the housing recovery I don't see a huge improvement.
In general yes what heading in the right direction but people still gonna be careful with the pennies us.
When there's a reason to like the holidays Jennifer Davis of the art capital no cell calls at the moment still quite bullish on these -- to see you think today.
