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Clothing retail took it on the chin the last few months. I know some people here follow this sector. Is this all the result of e-commerce, or is something else going on? Is there anything here that looks overdone? I noticed someone recently did a write-up on CHS over on VIC.

https://twitter.com/mitchnolen/status/1135236387689467904
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Actually, that guy's entire Twitter feed paints a bleak picture of bricks and mortar retail with over 8,000 store closures announced this year.

https://mobile.twitter.com/mitchnolen
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it just seems a combination of things:

*25% tariffs hitting this area particularly hard
*Mexico tariffs add to uncertainty
*as urbn noted in their call, after years of downturns in traffic in the store space 2018 was an upswing but it didn't last and now 2019 must compare against a good year
*persistent freight pressures - expected to tail down in 2H; if we do get a recession or slowing growth, this could turn into a tailwind
*significant labor pressures not easily reversed - this is both from states rising their minimum wages to tough labor markets in general, and many retailers have been raising wages - which can't be easily undone in any downturn
*anecdotally, but e-commerce is a particularly horrible model for retail from what seen - very few companies make money doing it, and I believe it cannibalizes customers; even the order online and pick in store can work against you
*increasing penetration of both e-commerce (amazon), subscription services, and no-profit companies (like Wayfair - great for customer, horrible for capitalists) with unsustainable business models perhaps that people are willing to fund along with growth in the major warehouse chains which suck up food traffic
*should be irrelevant, but lease changes in how things are presented on the BS

Of course, just throwing in an obvious observation: most retail management teams are dim-witted when it comes to capital allocation. In the end, buying shares when you run a no-moat business ought to be outlawed, but so many persist in doing it and attract outside 'activists' who only want to rent the stock for a few months and loot the BS. It is a tough cycle - and activists who get involved in this space can do untold damage.

Opportunities? It is hard to say - the problem with these business models is none of this is predictable, so looking thru the trash it is hard to find something to be sure about. If you want to venture, the obvious thing to do is insist on a few modest things:

*no buyback plans. Avoid any marginal retailer than does them.
*tight CapEx budgets. Really important to look over 3 to 5 years and avoid those who blow them up in good times which they often do
*superstrong BS. Cash, in other words, to give you time to wait out bad times.

I own a couple plays but with marginal dollars. It is hard to find a single no-moat one to give your confidence, but today's rotten numbers will be tomorrow's easier compares.

2c
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food traffic....mmm.....I guess that's the low priced hot dog at Costco (foot traffic)

sorry, every where else I post I hit submit and then edit cause it is just easier to edit that way for me, so....sorry for typos
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posted in barron's - just emphasizes the point -from a credit analyst

Because of what I said about [the BBB ratings] being for the most part self-inflicted, investment-grade companies could just pull back on share buybacks, or on the acquisition front. In bond land, we’re not out here trying to tell companies that they have to have 10% growth every year. We’re just happy with them being stable and predictable, if at all possible.

But then, these days, if you decide to be conservative with your balance sheet, you get the shareholder activists going after you and encouraging you to come up with some kind of split up or buy back more stock or optimize your balance sheet. So I sympathize with management, because I imagine that chief financial officers, especially, would probably always prefer to be conservative and prudent. But they have pressures.

I mean, they went after Citi-trends with a load full of BS, Citi-trends which is as commodity as they come - these folks (activists) can do good but not with no-moat companies - they are like the coming of the plague when they get involved and think spare cash is a bad thing...
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