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Tickers in this Article: BJ, BWLD, ARO, RSH
The current economic recession has caused many consumers to dramatically cut back on their spending. Some of the reasons for this have been rising unemployment and less confidence about the short-term and immediate-term economic prospects. As a result, many of the largest retailers have been facing some of the most challenging economic conditions in years. However, it appears as if consumer spending is entering the early stages of a recovery.

Evidence of a Recovery
While no one knows what the future will bring, the consumer confidence numbers have been improving dramatically for the month of April, coming in at 39.2 up from 26.9 in March. Lynn Franco, director of The Conference Board Consumer Research Center, said that "consumer confidence rose in April to its highest reading in 2009, driven primarily by a significant improvement in the short-term outlook. The Present Situation Index posted a moderate gain, a sign that conditions have not deteriorated further, and may even moderately improve, in the second quarter. The sharp increase in the Expectations Index suggests that consumers believe the economy is nearing a bottom, however, this index still remains well below levels associated with strong economic growth." Though some consistency still needs to be shown with the numbers, early indications are that consumer confidence is improving. When consumer confidence improves, so does spending. (For further reading, see Consumer Confidence: A Killer Statistic.) IN PICTURES: Eight Ways To Survive A Market Downturn

Making Money Through Consumer Recovery
There are countless ways that you can play the recovery of the consumer. We'll go over some promising equity positions that have the potential for a significant increase as result of this recovery.

B. J.'s Wholesale Club
(NYSE:BJ) reported better-than-expected numbers for the fourth quarter of 2008, with earnings of 91 cents per share in comparison to the same period last year where the company reported 80 cents per share. In addition, B.J.'s reported positive sales growth for February and March, 2.4% and 1.7% respectively. The company has reported better-than-expected year over year numbers and positive sales for both February and March, signaling that consumers may once again be increasing their spending.

Buffalo Wild Wings (NASDAQ:BWLD) reported better-than-expected earnings of 47 cents compared to the same period last year where it reported earnings of 36 cents. Furthermore, President and CEO Sally Smith said that the "revenue growth of 35.3% and net earnings growth of 30.1% demonstrate the stability and strength of the Buffalo Wild Wings brand and the ongoing commitment to exceptional execution by our franchisees and team members." In spite of the global economic recession, the company is delivering stronger year over year numbers and is continuing to show impressive results, indicating that consumers may once again be spending.

Aeropostale Inc. (NYSE:ARO) announced better-than-expected fourth-quarter results of $1.01 compared to 95 cents for the same period one year ago. In addition, the company announced that same store sales for the time period that ended on April 4, 2009, increased to $160.5 million compared to $141.8 million for the same period a year ago. Even though consumers have sharply cut spending over the past year, Aeropostale's earnings are improving on a year over year basis as well as in the same store sales numbers, signaling that consumers are once again increasing their spending. (For more, see Analyzing Retail Stocks)

Radio Shack Corp (NYSE:RSH) announced improving earnings in comparison to a year ago, reporting earnings per share of 34 cents in comparison to 30 cents a year ago. Chairman and CEO Julian Day said that "an 8% operating margin is the strongest first-quarter performance we have achieved since 2004. Of particular note were strong performances in our wireless business and digital converter boxes." These numbers show that in spite of the recession, consumer spending is continuing to increase, especially when you do a comparison of the year over year numbers.

Bottom Line
While no one knows what the future will bring, one thing is clear: consumer spending is starting to improve. Recent evidence of this is shown in the strong consumer confidence numbers along with improving year over year earnings from B.J.'s Wholesale Club, Buffalo Wild Wings, Aeropostale and Radio Shack. All four companies cover completely different areas of consumer spending; improving results from these companies and stronger consumer confidence numbers could be signaling that the consumer spending is in the early stages of recovery. (For more, see Using Consumer Spending As A Market Indicator.)

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