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MKM Partners managing director Patrick McKeever and J. Rogers Kniffen Worldwide CEO Jan Rogers Kniffen discuss the state of the retail sector.
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Well deep post holiday discounts a big lure for shoppers January same store sales blowing out expectations for many of the big retailers.
-- what is the losers Jen Rogers defendant Jared -- and -- And if you -- and camp partisan -- start with you.
On Macy's.
They had an improbable Monsanto sells up more than 11%.
-- has barely moved and the rest of the sector.
Down what's going on.
-- he gets no.
Respect.
They haven't moved at all they've had a great year they've had a great finish they -- -- earnings by three cents they're relatively cheap.
Nobody wants -- in my talk to clients all the time about it.
It's really a lack of interest it's certainly not a -- reform and -- -- -- one of the star performers 2000.
I know it's hard to get people involved.
It's a great stock it's a great company they're winning the -- channel thing they're doing all this business on the Internet.
What they're doing all the right stuff there localize and assortment -- great numbers and the stocks do enough.
OK watch is -- stocks are Patrick especially now that you've got TJ actually got Ross Stores on your radar right now these are a couple that again.
Just like -- they upped their guidance and again that the Wall Street today saying act thanks a lot you know what what's happened.
-- -- Well TJX is pretty close to its all time highs so maybe a little profit taking.
The numbers were pretty much right in line with expectations they had a 3% increase in January same store sales.
And that Ross was good say they at a 4% increase on top of a big gain a year ago.
-- this stock has had a nice recovery off of its -- -- but gets done pretty well to -- and there was nothing you know incrementally positive I guess this morning.
But those those names that had some nice top line momentum and I'm looking for that to continue in 2013.
GI -- another very controversial group of stocks and -- watching this because then the dollar's -- whether it's failing dollar Dollar General.
He that is interesting split in the analyst community on the sectors some say.
That the economy is gonna were -- those consumers are not gonna keep going back others say what are you talking about about a company's -- for these guys what he's.
I'm not concerned about the economy so much as I -- the 2% tax hit.
I think they get hurt by that but I think the really big issue with dollar stores is the real strength we're seeing out of Wal-Mart right now.
Wal-Mart is starting to put a lot more product in the store directly pointed at the dollar store smaller package sizes.
They're doing comparative advertising on television directly against the dollar stores that's never good when the -- 300 pound gorilla in the room starts sitting on your.
Okay okay we say that Patrick Wal-Mart does smack -- the dollar stores around is that true.
Maybe a little bit but you know.
Over the past several years the dollar stores have been up until very recently -- quarter so they've been generating mid single digit same store sales growth.
On top of those kinds of numbers a year ago so they've actually seen some nice market share gains at wal mart's expense.
And maybe more recently yes I agree with -- wal mart's come down a little more aggressively on pricing and they've done a little bit more at the dollar price pointless and -- package sizes and whatnot.
Trying to really go after that dollar store customer but.
I don't see a major impact there I think the dollar the dollar stores will win on their convenience they're much more convenient than Wal-Mart.
But they also have you pretty much pricing parity with former its of their very that they have great value as well.
Actually what yeah overall -- -- it was a -- to summer.
For this sector which bit you know banks more than 40% other revenue for the holiday season and still -- stocks held on until now.
We've got a storm coming in this weekend big storm hit the northeast in 25% of the nation's population sitting right here that -- shop the street and -- -- -- No they're not gonna shop this weekend that that -- are really small month.
This -- important but it's not gonna change.
Probably the first quarter I think what you're really seeing is all this concern about.
2% increase in the Social Security tax.
What's gonna happen is these guys start to react to.
The increased costs of Obama care there's a lot gonna happen this year and so I think we're just starting to get those first and -- indications that the investment in he's worried about it.
That's -- Patrick and to go back to the dollar president any cover that group or an absurd but the discounters overall you cover.
But I can't but wonder if that lower end consumer -- with the payroll tax.
Change that the that the increase of their checks that they've seen a lot of -- -- getting hit with fat.
Concerns about the economy Patrick if if your group is maybe gonna you know have some pressure the next couple months there.
Or it's it's definitely there's no question about it that it it's an issue.
Consumers are all consumers are paying more this year than they did a year ago in and income taxes.
That I have six companies that report monthly sales and only one of them a small company that I covered -- Kato.
Called out the higher payroll -- has a negative target kind of -- today that.
Hinted that it -- it's actually that they sense they said something about it in their commentary as well they did mention so that's two out of six but.
I mean I think that as it relates to my group my discount group -- dollar stores what we'll probably see is is the return of that trade down dynamic that we saw so you know.
So well during the recession so I think you know.
There's some negatives it's a negative for the core.
Dollar store customer of the core lower is that the lower income consumer but you know I think all all consumers are going to be focus more on value this year.
All right passionately -- Jen Rogers and offend that your.
Starts again Hillary tell us -- thank yep.
