Holiday Headaches: Port Traffic Cuts Into Retailers' Optimism

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(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA. Short data sourced from Yahoo! Finance. Institutional data sourced from Fidelity.)

Last week Kapitall reported optimistic sentiment among retailers for this year’s holiday season spurred by a more cautious approach to inventory and encouraging changes in consumer sentiment. But not everyone is sold on the cheery holiday sales forecasts.

Companies that ship and transport retailer’s goods don’t see their order forms adding up to the optimistic expectations of 5-6% growth in same store sales.

New York Times reports holiday orders, which arrive in stores by late October, typically start to pile into US ports in August and September. But Long Beach, the second-busiest container port by volume in the US, reported August 2011 imports to be 14.2% lower than 2010 volumes. September volumes, not yet released, are expected to be 15% lower than in 2010.

The reports from the remaining top five ports were equally gloomy: “In New York-New Jersey, the number of incoming containers in August was about flat with last year. In Savannah, Ga., imports in August fell by 4 percent. Oakland reported that August imports were down 0.9 percent from a year earlier. And Los Angeles, the nation’s highest-volume container port, counted 5.75 percent fewer containers in August than a year earlier.”

This could partially be the result of an overly cautious approach to inventory levels – retailers have increasing concerns of being left with overstock – however the scale of the decrease is questionable given expectations of higher sales.

“We talk to the railroads, we talk to our ocean carriers, and they’re not seeing this big peak, or bracing themselves for a big late peak,” said Mr. Steinke, executive director of the Port of Long Beach in California, to New York Times.

Simply put, shipments do not seem high enough to signal strong holiday sales. So which consumer stocks are most vulnerable to a slowdown in holiday demand?

To help you find ideas, we collected data on about 180 consumer stocks. Below we’ve listed the names that have seen significant institutional selling. In addition, all of these companies have seen a sharp increase in shares shorted over the last month.

Sophisticated investors like short sellers and hedge funds think these consumer stocks are in deep trouble–do you agree?

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1. Warnaco Group Inc. (WRC): Designs, sources, markets, licenses, and distributes a range of intimate apparel, sportswear, and swimwear worldwide. Net institutional sales in the current quarter at -1.7M shares, which represents about 4.02% of the company's float of 42.25M shares. Shares shorted have increased from 3.43M to 3.93M over the last month, an increase which represents about 1.18% of the company's float of 42.25M shares.

2. Gap Inc. (GPS): Operates as a specialty retailing company. Net institutional sales in the current quarter at -30.7M shares, which represents about 8.38% of the company's float of 366.29M shares. Shares shorted have increased from 22.66M to 28.16M over the last month, an increase which represents about 1.5% of the company's float of 366.29M shares.

3. Darden Restaurants, Inc. (DRI): Operates full service restaurant in the United States and Canada. Net institutional sales in the current quarter at -6.5M shares, which represents about 4.97% of the company's float of 130.87M shares. Shares shorted have increased from 7.17M to 8.50M over the last month, an increase which represents about 1.02% of the company's float of 130.87M shares.

4. Cracker Barrel Old Country Store, Inc. (CBRL): Engages in the operation and development of the Cracker Barrel Old Country Store restaurant and retail concept in the United States. Net institutional sales in the current quarter at -1.6M shares, which represents about 8.21% of the company's float of 19.48M shares. Shares shorted have increased from 2.05M to 2.31M over the last month, an increase which represents about 1.33% of the company's float of 19.48M shares.

5. Companhia Brasileira de Distribuicao (CBD): Operates as a retailer of food products, clothing, home appliances, and other products through its chain of hypermarkets, supermarkets, specialized and department stores, convenience stores, and the Internet in Brazil. Net institutional sales in the current quarter at -6.4M shares, which represents about 7.59% of the company's float of 84.31M shares. Shares shorted have increased from 3.69M to 4.74M over the last month, an increase which represents about 1.25% of the company's float of 84.31M shares. 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: CBD , CBRL , DRI , GPS , WRC

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