It is no secret that the consumer is in the tank and that retail sales are coming in poorly.  It would have been a fool’s gold trade to believe you were going to see any great sales for September’s same-store-sales figures.  When you compare it to the results of 2007, all you have to do is mark last September as the month where the consumer was officially starting to consider that things were going to slow down in the months ahead.  But there are several retailers that just aren’t making the grade.  These are some of the active stocks we are reviewing today:  Abercrombie & Fitch Co. (NYSE: ANF), Chico’s FAS Inc. (NYSE: CHS), Gap Inc. (NYSE: GPS), Pier 1 Imports inc. (NYSE: PIR), and Stage Stores Inc. (NYSE: SSI).

Is Abercrombie & Fitch Co. (NYSE: ANF) on the verge of losing its"coolness" with its young audience?  Maybe the woes at home with momand dad are finally tricking down to the youngsters.  The clothingretailer said that September same-store-sales were down a whopping 14% (total company sales dowmn 7% too)and it issued an earnings warning.  Its Hollister brandcomparable sales were down 20% and its Ruehl comparable sales were down24%.  Its stock is down almost 8% at $29.95, and that is a 52-week low.

Chico’s FAS Inc. (NYSE: CHS) posted same-store-sales of -15.6%.  Eventhough the estimate was -13%, this is hardly any sign that things aregetting better.  Shares are down about 70% over the last year.  MommaPhelps isn’t making a huge difference yet.  Shares are down less than 1% at $4.13.

Gap Inc. (NYSE: GPS) is still looking like its new management team isin for a long slow ride.  Its same-store-sales for September fell 11%,worse than estimates of about -8.5%.  We have criticized this companyover and over for its OLD NAVY brand which should officially change itsname to "OLD LAMIE."  OLD LAMIE’s comparable sales fell 24%.  Open noteto management from 24/7 Wall St.: "Spin that crummy OLD LAMIE brand off to holders, bring in anentirely new team with a 2-year turnaround as a re-brand with all of those giant storeleases."  It would seem that not even the homeless want to wear this brand.  Shares are down less than 1% at $15.25.

The troubles are continuing at Pier 1 Imports Inc. (NYSE: PIR) afterthe troubled retailer said September same store sales fell by 11.7%.It further noted that if recent sales trends continue it will missearnings estimates for the quarter and second half of its fiscal year.  Amazingly enough, shares are up over 4% at $2.19.

Stage Stores Inc. (NYSE: SSI) issued an earnings warning.  In fact itis "significantly" going to miss earnings after it said that its samestore sales fell by 13.6% in September.  That now means that a losswill be heading its way rather than a small positive earnings.  Shares are up more than 1% at $10.52.

What is almost funny or absurd is that some of these stocks are tradinghigher with the broad market this morning on hopes that all of therecent interventions and government efforts will help to keep therecession from getting out of hand.  Even with these stocks all being down so much from their 52-week highs,the rally seen in some of these sort of brings to mind rewarding aperson who totaled your car because you wanted a new ride.

Jon C. Ogg
October 9, 2008

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