It's been interesting to see some investors push into consumer discretionary retailing stocks the past few weeks. That may be a function of lower gasoline prices, but it seemed to ignore the coming impact of higher commodity prices on margins. Since it takes a few quarters to work such prices through the food chain, the surge in commodity prices that began from The Bernank's declaration to inflate everything starting in late August 2010, now appears to be hitting. Polo Ralph Lauren's (RL) earnings this morning are a fine example, as margins were squeezed to the tune of 220 basis points. Yes there was a 5 cent miss but I think that degree of margin compression is what has been hitting the stock. Also some inventory buildup, but that could be 'transitory'.
Now we could in theory make a bull case for the longer term in retail, especially the higher end
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