Retail Is Going Down… You May As Well Make Some Money On It
Retail is going down. The U.S. consumer is on life support. Remember, home equity and credit cards have fueled consumption for years. With those sources completely tapped out and unemployment rising, consumption is plummeting. Retailers and those linked to retailers are going to struggle big time. Target the ones with high debt and watch them go under.
Macy’s (one of the retailers with a ton of debt) just announced cutting the dividend and laying off another 7,000 employees. Macy’s could easily be bankrupt at some point in the near future, and I think it is almost certain that you will see more and more store closures… which takes me to my next point.
Also, look at some commercial real estate companies, especially the ones tied to retail, to find more companies that are sure to struggle in the near future. Store closings like Linens n Things and Circuit City is really going to kill these commercial real estate holders.
I am currently short the following companies:
- Macy’s (M)
- Staples (SPLS)
- Simon Property Group (SPG)
- Vornado Realty Trust (VNO)
I’m also looking to grow these positions on any short term rallies such as government stimulus news or anything of the sort. We have way too many stores for being a country that is flat broke. Again, retail is going down.
Do you have any suggestions of retailers with high debt and deteriorating business? Join the discussion.