JJC:   In tonight's Sell Block, I'm going to teach you to invest like the pros invest...  I'm going to teach you how the pros sell...

They like to buy one stock of a company that's doing well...  Urban Outfitters (URBN) and, at the same time, sell the stock of another company that's doing badly...Liz Claiborne (LIZ).

This is called "pairs trading"...  and, today, I'm going to show you the ultimate pairs trade.  It's URBN versus LIZ.   If you were a pro, you'd be buying URBN right here... It's on fire with a "hit them where they ain't"...  It just opened three stores in Brooklyn, where the hipsters have attitude...  and LIZ, which is being weighed down by lousy same-store sales, a string of pre-announcements and, yes, faltering brands...

In a pairs trade, one company has to be really strong, and the other really weak... and that's exactly what we have in these two retailers...

URBN's got three divisions, all of which are kicking butt and taking names...  There's the original Urban Outfitters for the 18-30 (year old) demo... which is growing sales at 18%... same-store sales up 6%...   And then there's Anthropologie, which is for women between 30 and 45... the second-largest franchise, 18% growth, incredible same-store sales growth of 18%... that means the same store is selling 18% more goods than the previous (year)... 

Finally, URBN has Free People, for women in their late 20s, although my youngest daughter likes to shop there.  This is an up-and-coming brand growing sales at a magnificent 30%, with 19% same-store sales increases...

URBN's direct-to-consumer business from online and magazine sales is also growing sales at about 30%.

Everything this company does seems to be working...

Overall same-store sales for the fourth quarter are up 11% in a really difficult environment.  Only Costco (COST) comes near this company, in terms of those numbers.

The CEO of this company, Glen Senk, has the best merchandise eye in the business, short of J. Crew Group (JCG)'s Mickey Drexler (their CEO).  Retailing, despite what you may read in the papers about volume or the quality of whatever, retail is about one thing...  Successful retail is about the eye...  the bad merchants have evil ones... 

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LIZ is a company that's losing ground.  URBN is a company that's taking it, leaps and bounds...  LIZ is also hostage to one of the great scourges of all apparel, Macy's (M), as well as other department stores...

URBN stands on its own two feet... or three feet, if you think of the divisions...   Macy's happens to be LIZ's largest customer.  They represent 14% of sales.   LIZ's hundred-largest customers - most of which are department stores - make up 67% of sales in the fourth quarter.  They're hostage...

These places are all discounting like mad, in order to make sales, thanks to the slowdown/recession, and they're crushing LIZ in the process...

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