Initial U.S. retail sales figures released on Wednesday showed sales growth for the holiday season was the worst since 2008.
According to MasterCard SpendingPulse, holiday sales posted a paltry 0.7% increase against expectations of a 3-4% gain. That's below the same period last year when sales grew at a 2% pace.
Analysts looking for a convenient excuse have been quick to blame Hurricane Sandy. But in reality, there's something else much bigger at work here.
That's why I'm actively hunting for shorts in the retail sector right now and will be for much of the first quarter next year.
Following the holiday data and some moderate earnings that incorporate the extra week this quarter, I simply don't think hard-core retail companies like the The Gap (NYSE: GPS), American Eagle Outfitters (NYSE: AEO), The TJX Companies (NYSE: TJX), and Abercrombie and Fitch Co. (NYSE: ANF) – which are up 71.3%, 47.41%, 32.2% and 50.67% respectively year to date through Christmas Eve – will be able to sustain these big up moves.
In fact, there are several real reasons why I think holiday sales were down and consumer spending will continue to drop into 2013, making select retailers good short candidates: