Abercrombie took the pipe, Foot Locker was predictably lousy. Where I'm looking now as we grind through Mall Store Earnings,
Some of the best trades I make are the ones I pass on entirely. So it was for $ANF which into earnings this morning already down 40% for the year and somehow managed to disappoint investors. The teen darling and recent 10-bagger reported numbers slightly ahead of expectations for Christmas but guided the current year well below expectations.
Needless to say Wall Street focused on the negative, sending ANF shares all the way down to the low $80s or 50% below where they were trading as recently as January.
I love ANF. I shop there with my son, it's made me a lot of money and the aggressively suggestive catalogs from the '90s were an endless source of delight when I was a younger man. Here's a little secret: consumer stocks are where love goes to die. If you hold your winners forever you usually end up broke. Love the game, date the stocks. Long-term ANF investors should have known better.
Which doesn't mean you need to forget about the companies entirely. Quite the opposite. Shares of the Gap have been public since the 1970s and peaked just over 25 years ago. That's not a misprint. The Gap went public in 1976, absolutely exploded in the public consciousness in the late 90s and is down 50% since.
If you'd had a kid in 1999 and put all its college money in shares of the Gap today you'd have a full grown adult with massive student debt.
Which doesn't mean you can't make money from the company now. Gap reports tomorrow afternoon. Shares have been brutalized for the last month along with the rest of the mall complex, from the mid-20s to the high teens. But I sort of like the idea as an investment. I like the new-ish CEO (I generally love a good new CEO), I think the Old Navy is coming back and think Athleta is a wasted asset.
I think Gap is more of a set-up like Foot Locker, where bad news gets bought than an Abercrombie where nothing will be good enough to save the shares.
I see the risk as high-teens with upside in the mid-20s as a reaction to Gap's report unless the consumer really imploded in February but even then I don't mind being long shares now that they've dropped a little more just because Wall Street fell out of love with ANF.
