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Tickers in this Article: HOTT, XRT, SPLS, URBN, CASY
In 1897, after rumors circulated in the literary world about the state of his health, Mark Twain penned the famous line: "The report of my death was an exaggeration." The same might be said of the American consumer, who apparently has risen from the dead on the back of a better than expected monthly sales report from the Commerce Department. Heck, several retailers are even bucking the trend with positive same store sales.

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Retail Sales Not A Disaster

The Commerce Department reported that retail sales were down 0.1% in February, less than the 0.5% decline that was expected. The government also revised January sales to increase 1.8%, up from the original report of 1.0%. The slight gain hardly reflects the collapse of consumer spending that is often reflected in the media. (Learn more about using these reports to invest in Using Coincident And Lagging Indicators.)

The SPDR S&P Retail ETF (NYSE:XRT), a market weighted index of 60 retail stocks across many different subsectors of the industry, is down 43% from its 52-week high. While this is not as bad as many other sectors, some individual retailers are down by even greater margins.

Some pundits have predicted that as many as 25% of all retailers will go under during the recession. This report, and other contradictory evidence, may belie this claim.

Positive Same Store Sales
Several retailers also put out positive same store sales results. Hot Topic (Nasdaq:HOTT), for example, reported a 19% increase in earnings and comparable same store sales increase of 5.2% for the quarter. The company has a strong tailwind in the quarter from sales related to the "Twilight" movie.

Office retailer Staples (Nasdaq:SPLS), however, saw negative comparable store sales in its most recent quarter. But during the March 11 conference call, management said, "We are nearly half way through the first quarter and we've seen some recovery."

Casey's General Stores (Nasdaq:CASY), which owns a chain of convenience stores across the U.S., reported that comparable store sales, excluding gasoline, were up 6.5% in the quarter.

Urban Outfitters (Nasdaq:URBN) reported earnings last week and the headline number was its 24% decline in profit. However, a closer look at the report shows that the comparable retail segment, which includes the direct-to-consumer, or internet sales segment, increased 3% in the quarter. Its internet sales increased by respectable 20%.

Bottom Line
The retail sector may not be the black hole that investors believe it to be, following an encouraging government report and several positive same store sales reports from select retailers. Investors should start looking through the scraps for bargains before a recovery becomes the consensus. (For further reading on this sector, check out Analyzing Retail Stocks.)

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