Thursday, August 13, 2009

Hermès vs. Wal-Mart

Hermès vs. Wal-Mart (WMT); upscale vs. downscale. It hardly seems like a fair fight in these trying economic times. The venerable Paris-based fashion house, whose customers range from traditional royalty to Paris Hilton and Madonna pitted against the world’s largest retailer, the Bentonville, Arkansas-based discounting behemoth, whose customers seem as likely to achieve fame on the Jerry Springer Show as anywhere else.

In fact, it is Hermès and the luxury retailers such as Louis Vuitton Moet Hennessy that have been prospering as of late. Last month, Hermès reported a 12% revenue gain for the second quarter. Today, Wal-Mart weighed in with a 1.4% decline in sales, citing “a sales environment more difficult than we expected.”

For a reality check on some of the relevant stocks, I have included the ratio chart below from StockCharts.com. The ratio tracks a ratio of the Claymore/Robb Report Global Luxury Index ETF (ROB) to Wal-Mart. ROB’s top holdings include Porsche, Daimler (DAI), BMW, Louis Vuitton Moet Hennessy, Hermès, Luxottica (LUX), Pernod Ricard, etc. As the graphic shows, the luxury segment has been dramatically outperforming the discount retailer since the March bottom.

ROB has still not exceeded last Friday’s top on an absolute basis or relative to Wal-Mart. While this fact is not yet noteworthy from a technical analysis perspective, it does bear watching going forward.

For a related post, readers may wish to check:

[source: StockCharts]

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7 comments:

  1. Mat JosherAugust 13, 2009 at 8:35 AM

    Neat comparison idea. ROB vs XRT on a weekly time-frame looks gloomy, though.

    ReplyDelete
  2. AnonymousAugust 13, 2009 at 9:32 PM

    Try comparing it to the Bank index and you'll see why luxury retailers are doing so well. Someone gotta spend the TARP-fueled bonuses.

    ReplyDelete
  3. stonebatAugust 14, 2009 at 4:16 AM

    rich gets richer. poor gets poorer.

    ReplyDelete
  4. AnonymousAugust 14, 2009 at 8:04 AM

    that's a very extreme call/put ratio for the ISE index/etf this morning??? the market looks very tired since the rally from mid July and suddenly now there's a rush to buy these calls. - james

    ReplyDelete
  5. Bill LubyAugust 14, 2009 at 8:33 AM

    Regarding the ISEE, I'm not sure which index/ETF is the culprit, but I will try to track this down. A quick glance of the most active list didn't give me an easy answer.

    In the past, the ISE has had a number of instances in which they provided bad intraday data. It's possible this is a data error that will be sorted out later.

    Cheers,

    -Bill

    ReplyDelete
  6. AnonymousAugust 14, 2009 at 8:37 AM

    yes, that's what i was thinking. usually ISE tracks this down pretty quickly. pretty extreme thus far compared to the CBOE's ratio today. - james

    ReplyDelete
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