Retail sales reports are out today, and for my Watch List companies they don’t look so hot.

Small Cap Watch List (Track at Marketocracy) member Big Five Sporting Goods (BGFV):

For the fiscal 2007 second quarter, net sales increased $6.0 million, or 2.9%, to $217.8 million from net sales of $211.8 million for the second quarter of fiscal 2006. Same store sales declined 0.2% for the fiscal 2007 second quarter, representing the Company’s first quarterly decrease in same store sales in over eleven years. The Company now expects earnings per diluted share for the fiscal 2007 second quarter to be in the range of $0.23 to $0.26, compared to previously issued earnings guidance of $0.25 to $0.33 per diluted share.

Mid Cap Watch List (Track at Marketocracy) member Abercrombie & Fitch (ANF) was slow, but at least improved from the dismal performance of recent months:

June comparable store sales increased 2% for the five-week period ended July 7, 2007, compared to the five-week period ended July 8, 2006.

Other signs are pointing to the consumer slowdown extending beyond just housing-related stores. The consumer was the last leg in the economy’s stool, so businesses had better take up the slack or we could be in for more of a slowdown than we already have.

Small Cap Watch List (Track at Marketocracy) member Aeropostale (ARO), a mall-based teen apparel retailer, announced that total net sales for the five-week period ended July 7, 2007 increased 5.3% to $111.4 million, from $105.8 million for the five-week period ended July 1, 2006. Same store sales for the month increased 0.2%, compared to the corresponding five-week period ended July 8, 2006.

It doesn’t take much to see that sales are slowing. Year-to-date, total net sales increased 11.6% to $475.3 million, from $426.0 million in the year-ago period. Year-to-date, same store sales increased 1.9%, compared to the corresponding period ended June 3, 2006. In May same store sales were up 1.9%, and the average for March and April (both of which were skewed by the early Easter) was 2.9%.

Nonetheless, the company announced a 3:2 stock split, effective August 6.

With the end of the first quarter approaching, it is time to adjust the names in my Watch Lists. I will price all the new lists as of the close on Friday, June 29.

Today I present my planned updates to the Small Cap Watch List. There was a fairly high level of turnover to the list. 12 of the 24 names from the previous run made it to the current list, which was also 24 names. Performance-wise, the list created in March has returned an unweighted average return of 2.6% through June 28, with 80% of the stocks in positive territory. All of the money-losers from the previous list fell out of consideration.
So without further ado, the names on the chopping block from the previous list are: PW Eagle (PWEI), Insteel Industries (IIIN), Allied Defense (ADG - Annual Report), Hartmarx (HMX), Parlux (PARL), Hansen Natural (HANS), FirstFed Financial (FED), Young Innovations (YDNT), ITT Educational (ESI), Rent-a-Center (RCII), Valassis (VCI), and Travelzoo (TZOO). The castaways include four of the five money losers from the previous portfolio (HMX, PARL, YDNT and TZOO) as well as the biggest gainer (ESI).
The new list is:

I will continue to track both lists on StockPickr.

Mid Cap Watch List (Track at Marketocracy) and Large Cap Watch List (Track at Marketocracy) member Abercrombie & Fitch (ANF) reported net sales of $215.0 million for the four-week period ended June 2, 2007, a 16% increase over net sales of $185.7 million for the four-week period ended May 27, 2006. May comparable store sales decreased 5% for the four-week period ended June 2, 2007, compared to the four-week period ended June 3, 2006. Those results mark a slowdown from the 4% same store sales decline last month.

The Cato Corporation (CTR) reported sales of $75.9 million for the four weeks ended June 2, 2007, a 3% increase over sales of $73.8 million for the four weeks ended May 27, 2006. Comparable store sales for the month increased 2%, which is more or less in line with the results over the last two months.

These results join those of Small Cap Watch List (Track at Marketocracy) member Aeropostale (ARO) to offer modest support to a continued consumer slowdown.

Small Cap Watch List (Track at Marketocracy) member Aeropostale, Inc. (ARO) announced that total net sales for the four-week period ended June 2, 2007 increased 19.3% to $88.1 million, from $73.9 million for the four-week period ended May 27, 2006. Same store sales for the month increased 1.9%, compared to the corresponding four-week period ended June 3, 2006.

The same store sales figure represents a slowdown from the 2.9% March-April average (both of which months were affected by the early Easter) and the 2.4% year-to-date figure.

Granted, a single mall-based teen retailer does not necessarily represent what is happening in the broader economy. But if the coming same-store sales numbers at other retailers follow suit, it has bad implications for the last remaining leg holding up the GDP stool.

It is retail sales reporting day, and here is what our Watch List names are saying.

Mid Cap Watch List (Track at Marketocracy) and Large Cap Watch List (Track at Marketocracy) member Abercrombie and Fitch (ANF):

April comparable store sales decreased 15% for the four-week period ended May 5, 2007, compared to the
four-week period ended May 6, 2006. Total Company direct-to-consumer net sales increased 48% to $13.6 million for the four-week period ended May 5, 2007, compared to the four-week period ended April 29, 2006.

The Company expects to report net income per diluted share of $0.64 to $0.65 for the first quarter of fiscal 2007. Despite difficult selling conditions, the Company expects to achieve its projected growth primarily through prudent expense management.

Analysts were expecting $0.66. And to think, last month they seemed immune.

Small Cap Watch List (Track at Marketocracy) member Aeropostale (ARO):

Aeropostale, Inc. (NYSE: ARO), a mall-based specialty retailer of casual and active apparel for young women and men, today announced that total net sales for the four-week period ended May 5, 2007 decreased 9.8% to $75.4 million, from $83.6 million for the four-week period ended April 29, 2006. Same store sales for the month decreased 14.0%, compared to the corresponding four-week period ended May 6, 2006.

Julian R. Geiger, Chairman and Chief Executive Officer said, “While our results for the month reflect the negative effect from the shift in Easter, we remain very pleased with our performance for the first quarter, particularly the combined March and April period in which we generated a 2.6% comparable store sales increase. During the month we continued to control both the depth of our promotions and level of our inventory. Accordingly, we were able to maintain the positive trend in our gross margins and we are on track to end the quarter with earnings above our previously issued guidance. We also remain well positioned for a smooth transition into the summer selling season.”

Based on the positive trend in gross margins for the month, the company updated guidance for the first quarter of fiscal 2007. The company now expects net earnings in the range of $0.24-$0.25 per diluted share, versus its previously issued guidance of $0.22-$0.23 per diluted share.

Analysts were expecting $0.23.

Large Cap Watch List (Track at Marketocracy) member TJX Companies (TJX):

Sales for the four-week period ended May 5, 2007, were $1.28 billion, up 2% over the $1.26 billion achieved during the four-week period ended May 6, 2006. For the thirteen weeks ended May 5, 2007, sales reached $4.2 billion, a 7% increase over last year’s $3.9 billion. Consolidated comparable store sales for the four-week period ended May 5, 2007, decreased 1% versus last year.

Carol Meyrowitz, President and Chief Executive Officer of The TJX Companies, Inc., stated, “Comparable store sales results in April were below our expectations, which we attribute to the unseasonably cold and wet weather across most regions of the country during the first half of the month. That said, when the weather warmed up during the second half of the month, customer demand for spring apparel accelerated significantly and comparable store sales ran ahead of our plan. Furthermore, despite April’s unseasonable weather, comparable store sales for the combined March/April period, which includes the Easter holiday, were up 3%, which was in line with our plans.”

All in all a mixed bag, with lots of things on which to blame any missteps.

The Mid Cap Watch List (Track at Marketocracy) lagged but the others gained significant ground.

Small Cap Watch List (Track at Marketocracy) was helped by Aeropostale (ARO) results. It gained 2.63% this week, compared with 0.66% for the S&P Small Cap and 0.74% for the Russell 2000. Since January 31, 2007 it has opened a total lead averaging 300 basis points compared to its peers.

The Mid Cap Watch List (Track at Marketocracy) only gained 0.28%, trailing the 0.73% gain by the S&P Midcap. Still, it leads by 1.64% since inception.

The Large Cap Watch List (Track at Marketocracy) got a boost from Sallie Mae’s (SLM) big rise on Friday. That helped it earn 1.6% for the week to easily beat the S&P 500’s 0.63%. Since inception it is leading by nearly 3%.

Finally, we continue to track our legacy (June 2006) all-cap watch list, which has had no changes made other than through corporate actions (buyouts, bankruptcies, etc.) It only gained 0.1% this week. More embarrassing, our generally bearish stance cost us this week as our personal portfolio actually lost 0.1%.

Small Cap Watch List (Track at Marketocracy) member Aeropostale (ARO) reported strong March sales and upped their guidance.

Aeropostale, Inc. (NYSE: ARO), a mall-based specialty retailer of casual and active apparel for young women and men, today announced that total net sales for the five-week period ended April 7, 2007 increased 31.5% to $124.8 million, from $94.9 million for the five-week period ended April 1, 2006. Same store sales for the month increased 15.9%, compared to the corresponding five-week period ended April 8, 2006.

While the Company said they saw a benefit to comparable store sales in March due to the early timing of Easter, they also raised guidance for the quarter, which ends in April:

The company now expects net earnings in the range of $0.22-$0.23 per diluted share, versus its previously issued guidance of $0.19-$0.21 per diluted share. This compares to net earnings of $0.15 per diluted share in the first quarter last year.

Mid Cap Watch List (Track at Marketocracy) member Abercrombie & Fitch (ANF) also reported strong results, and said nothing whatsoever about Easter:

Abercrombie & Fitch (NYSE: ANF) today reported net sales of $331.2 million for the five-week period ended April 7, 2007, a 29% increase over net sales of $256.7 million for the five-week period ended April 1, 2006. March comparable store sales increased 7% for the five-week period ended April 7, 2007, compared to the five-week period ended April 8, 2006. Total Company direct-to-consumer net sales increased 47% to $17.7 million for the five-week period ended April 7, 2007, compared to the five-week period ended April 1, 2006.Year-to-date, the Company reported a net sales increase of 20% to $537.8 million from $449.5 million last year. Comparable store sales increased 1% for the year-to-date period. Year-to-date, total Company direct-to-consumer net sales increased 41% to $29.8 million.

By contrast, Target said yesterday that while March results were very strong, it expects sales at its stores open at least a year to decline 2 percent to 4 percent in April due to the earlier timing of Easter.

Today it was Cato (CTR) and others saying March sales were favorably impacted by the shift of Easter to April 8 this year versus April 16 last year, while April sales are expected to be unfavorably impacted by this shift.

So, are teen retailers insulated from Easter fluctuations or are the other companies just using Easter as an excuse?

With the end of the first quarter approaching, it is time to adjust the names in our Watch Lists. We will price all the new lists as of the close on Friday, March 30. Today we present our planned updates to the Small Cap Watch List (Track at Marketocracy).

Frankly, we were surprised at the amount of turnover in our screens. Only 9 of the original 29 names made the cut for the new list (which comes in at only 24 names.) Still, given the level of outperformance we saw in the first quarter (actually just two months) and the fact that much of those gains were achieved early, perhaps the turnover is warranted.

So without further ado, the names on the chopping block from the previous list are:

Silgan Holdings (SLGN - Annual Report); Steel Dynamics (STLD - Annual Report); NVR (NVR - Annual report); Middleby (MIDD); Vector Group (VCG); Sanderson Farms (SAFM); Downey Financial (DSL); Waddell & Reed (WDR); Wilshire Bancorp (WIBC); Harrington West (HWFG); Gamco Investors (GBL); Apria Healthcare (AHG); Papa John’s (PZZA); Cato Corporation (CTR); Meredith Corporation (MDP); CSG Systems (CSGS); Energy East (EAS); Dynamics Research (DRCO); Ingram Micro (IM); and Dade Behring (DADE).

The new watch list will be: