Retail executives tuning in to Jim Cramer's Thursday evening "Mad Money" show on CNBC were left with a simple message: transition to an off-price or online model or fade away.
Cramer's Retail Thesis
One of the more prevalent trends in the retail sector is that the big-box and discount chains that are showing growth are doing so through discounting or selling online, Cramer said.
For example, Burlington Stores Inc (NYSE: BURL) showed 3.9% same-store sales growth in its recent quarter and sales rose 10%. The stock should be bought by investors after the "major beat," even if the next few months will be a difficult time for the retail sector, the CNBC host said.
In contrast, Kohl's Corporation (NYSE: KSS) made it clear that lackluster incentives translated to flat comp sales and revenue growth in the fourth quarter, he said.
The company did show a top-and-bottom-line beat in its recent first-quarter report, Cramer said.
But amid coronavirus concerns, the stock is less dependent on how the company is performing and more has to do with "buyers not wanting these stocks," Cramer said.
Kohl's Valuation Plunge
Kohl's stock has lost more than 50% in the past year and its dividend now implies a yield of 8.25%. The company has "never felt more irrelevant" amid intense competition, and that dividend payout "may be in danger," Cramer said.
Retail In The 'Post-Coronavirus World'
Retailers that aren't transitioning toward off-price or online will be in "trouble," especially in the "post-coronavirus world" where it will become even tougher for the sector, Cramer said.
Photo by MB298 via Wikimedia.