Retail Sales

Today's higher than expected retail sales numbers should be interpreted cautiously. Overall, the numbers were mixed and many companies reporting positive November sales lowered their December forecast.The percent increases in sales were impressive at many department stores driven by successful "Black Friday" promotions. High sales are a good sign. The question is at what price? How compressed did the margins get to generate those sales? The higher end stores will come out ahead of mid-tier retailers like Macy's (M) and J.C. Penny (JCP).

Retail stocks have seen some serious multiple contraction this year. This is in anticipation of higher discounting and a thriftier consumer. I agree with what the market is saying and I would continue to avoid the sector.

Note: I have no position in JCP or M