US Retail Team
Formidable 5 / Fading 5 Portfolio
Research
US
Formidable
Five
AAP
DLTR
WEN
WMT
YUM
Fading
Five
ANF
SONC
SHLD
SWY
UA
Performance update: Overweights marked progress, Underweights still
penalized by the beta trade. Through the end of August, our portfolio is down
0.7% for the month, down 23% YTD, up 14% for the last 12 months and up 46%
since inception in November 2007. (See page 4 for comparative performance.)
Two stocks in the Formidable 5 have performed well recently, WEN and
DLTR. Wendy’s/Arby’s Group is up 20% over the last three months and Dollar
Tree is up 12%, compared to the S&P 500 Retail Index, which has returned
15% and the S&P 500 Restaurants Index has returned about 1%. The broader
market return, as measured by the S&P 500, is 12% over the last 3 months.
In the Fading 5, SWY is best over the last 3 months, Sears notched
improvement in August. Safeway is down 5.5% over the last 3 months as the
company reduced guidance 18%, admitting it would need to make significant
price reductions near-term to stimulate sales. Mark Wiltamuth notes that it
could take a long time before sales trends turn; it took Ahold’s Stop and Shop 9
months of price cuts before same store sales improved.