(Profile Facts) - Holiday sales have outpaced expectations so far for U.S. retailers, but stock pickers still see several retailers, including Wal-Mart Stores and Sears Holdings, as laggards days before Christmas.
The reasons range from making bad merchandising bets to not discounting enough early in the season to being out of step with fashion, analysts and investors said.
Wal-Mart converted garden centers in more than 2,000 U.S. stores to temporary toy sections just last week as part of an 11th-hour push to win last-minute holiday shoppers.
"They are clearly playing catch-up too late in the game," said Craig Johnson, president of Customer Growth Partners, adding that the No. 1 retailer has lost out to smaller rival Target Corp in many categories this year, including electronics, which was formerly a Wal-Mart strength.
"Wal-Mart said they (will) have a Christmas of socks and underwear, and that's what has been the case," he said. On the other hand, "Target has had an exceptionally strong season. They are operating on all cylinders."
Best Buy also lost some tech shoppers to Target and other discount rivals as a decision to focus on promoting pricier 3D televisions backfired. The retailer is now trying to change tack and advertise cheaper TVs.
"Best Buy is Target, Costco and Apple's gain," Shawn Kravetz, who manages Esplanade Capital, said.
CONSUMER FEELS BETTER
Best Buy is also being challenged by online sites such as Amazon.com, and Wal-Mart, which has dramatically increased its inventory in a move that likely took sales away from Best Buy, David Berman, president of Durban Capital said.
The holiday season started off with a bang as consumers flocked to stores on the day after Thanksgiving. As a result, the National Retail Federation and others raised their expectations for holiday sales.
The American consumer "feels a little bit better (but) she still needs the bargains," Patty Edwards, chief investment officer of Trutina Financial said.
Both Talbots Inc and American Eagle Outfitters Inc drew brickbats from retail investors for their fashion faux pas.
"It's not your mother's Talbots, it's your grandmother's Talbots," Edwards said, stressing that many of its recent ensembles "look cheap" or are completely out of vogue.