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Strategies & Market Trends : Value Investing
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To: Shane M who wrote (59284)3/27/2017 2:48:50 PM
From: Micah Lance1 Recommendation  Read Replies (3) of 78476
 
I've recently been thinking about the same with retail. Retail can suck you in with valuation, but big trends are working against them

I agree 100%. Graham mentioned how Amazon (AMZN) can come in and disrupt just about any business in retail and I agree with his assessment. I was in Bed Bath and Beyond (BBBY), but sold out on the initial trump bounce after rethinking my thesis. Amazon's supply chain is pretty incredible and I don't see any reason why they couldn't come in and take out companies like a JCP or Macys (M).

IF I were to go into the sector, then I would look for individual clothing retailers or something like that. Maybe like a Ralph Lauren (RL) or a Michael Kors (KORS). I think these will survive on some basis as they are designing clothes etc instead of being stores like Macys that sells other companies clothing lines. I could easily see Amazon coming in and running a company exactly like Macys but with tighter controls and better supply chain and selling stuff like RL and KORS.

The Grahamite in me wants to see them get beaten down a bit more before I jump in. I think if the consumer really slows then there will be some real pain in retail which could present a really nice entry point.
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