In the luxury space I’d be cautious, Grom adds. I think shoppers are waiting for big sales. I was bullish on Saks (SKS) but got out at $7. Right now, I’d point investors to the mid-teir deparment stores.

Q: Why is technology an issue?

A: Because retailers have been so late to the game. That's the underlying story at Saks [SKS]. They have invested a lot in technology. So has J.C. Penney [JCP], which has spent a lot of time on cycle-time reduction. And there's Home Depot, which is upgrading its technology. That's the common thread in terms of the retailers we have Buys on. Consistent with this theme, Nordstrom [JWN] did a major technology implementation in 2004, and now they have some of the best inventory turns in my coverage universe.

"Anybody know why Bill Ackman didn't go after Saks (SKS)? Wouldn't that have been a better target? How about Liz Claiborne (LIZ)? Any back-of-the-envelope calculation would have told you that Target (TGT) is one of the few retailers that generated any wealth at all over the last 10 years. It also had one of the most sophisticated and best boards imaginable in part because of the excellent and legendary charity programs that it runs." ("The 10% Pullback Mob," 6-3-09)

Italian entrepreneur Diego Della Valle, who is chairman and chief executive of Tod's, an Italian luxury-shoe maker, bought 8.48 million shares of the upscale retailer Saks for a total of $30 million during the period from Feb. 20 to May 7.

well run

While the U. S. economy is now officially in recession, making consumer-dependent companies "a big, scary area," Galluccio believes some specialty retailers and consumer-goods outfits with solid niche businesses or high-quality products are priced to buy and hold. That's why the portfolio manager has put hammered names like J. Crew Group (JCG), department store Saks (SKS), jeweler Tiffany (TIF) and Cheesecake Factory (CAKE) in his portfolio.

China Watch: In the Lap of Luxury: Paul Boni, chief research officer for Grail Research, says China's growing thirstier for luxury goods despite the global downturn and predicts growth in China's luxury-goods market. Hear what companies he expect to move soon.
Click here to watch the video.

PE: 10

The Real Story Wrap: November 18: Stocks on Wall Street ended an erratic session with gains Tuesday afternoon, as traders weighed encouraging news from several big technology companies against troubles among financial firms and automotive companies.
Click here to watch the video.

Another apparent retail fan is Slim, who invested in industrial and financial businesses during Mexico's 1980s debt crisis. In early October, a Slim-controlled trust bought nearly $11 million of Saks (SKS) stock, boosting his already significant stake in the parent of tony Saks Fifth Avenue. Saks has fallen more than 70% in the past year, to around $5 a share. Slim paid about $7 a share.

Nothing to see here.

HIgh PEG

The Christmas party is over, but the hangover of that lofty PE remains. Even a premier name is subject to "regression toward the mean".