Retailers that had once been left for dead are making big comebacks--big enough for us to wonder if they're for real.
What do we mean? Yesterday, Abercrombie & Fitch (ANF) got a big bounce from its upbeat fourth-quarter earnings, and even while fellow teen retailer American Eagle (AEO), which dropped nearly 10% today after earnings of its own, is still up 89% during the past 12 months.
Some see real signs of progress in these rallies. BMO Capital Markets analyst John Morris, for one, writes that he's encouraged that Abercrombie and other specialty retailers are seeing strong trends to start the year, as many worried that holiday momentum could. Morris goes as far as to say that this strong start to the year "could set the stage for a Goldilocks retail environment of lean inventories coupled with a strong consumer."
That said, even if such an ideal environment materializes—a big if?—retailers won't be able to rest on their laurels, given the rapid evolution needed to keep pace with younger consumers--who may be scooping up Abercrombie again, but certainly still love to buy clothes Amazon.com (AMZN).
And there certainly was no sign of a retail Goldilocks today: Abercrombie dropped 5.7% to $22.34 today, while American Eagle Outfitters tumbled 9.5% to $18.63, and theSPDR S&P Retail ETF (XRT) fell 1.7% to $44.78. Amazon.com, of course, advanced 0.4% to $1,551.86.