Mild weather, falling unemployment and improved consumer confidence helped lift retail sales by 1.1% in February, to a new record high of $407.8 billion. The increase was the largest since September and edged ahead of consensus expectations for a 1.0% rise.
January numbers, meanwhile, were adjusted higher as well. The new reading reflects sales growth of 0.6%, up from the previously reported 0.4% expansion.
Despite the fact that the average price for a gallon of gas rose by 20 cents in February, vehicle sales were a particular pocket of strength, rising 1.6% in the month. In fact, it was the best sales month in four years for U.S. automakers. Excluding autos, retail sales grew by 0.9%.
Fashion Forward
Apparel retailers were also strong during February, collectively posting a sales gain of 1.8%, or the largest monthly increase since November 2010. Not only did a mild winter lure consumers out of their homes and into the malls, but it forced retailers to offer more attractive promotions on leftover winter clothing. Chains such as Gap (NYSE:GPS), Buckle (NYSE:BKE) and The Limited (NYSE:LTD) had previously announced strong same-store sales for February, so overall sales growth in the sector wasn’t a huge surprise.
The “core” sales numbers, which exclude auto, fuel and building-material sales, grew by 0.5% during the month after a 1.0% move higher in January. Core retail sales more closely align with the consumer-spending data point within gross domestic product (GDP).
Seeing More Green?
This growing sales trend could continue this month, in part because St. Patrick’s Day proper falls on a Saturday this year. More than half of the Americans surveyed by the National Retail Federation say they will celebrate the holiday this year by shopping for green gear and hitting the pub for a pint or three.
Americans expect to spend around $35 each, with 82% on the hunt for themed apparel and 30% expecting to go to a restaurant. (How are corned-beef futures looking these days?) What’s more, 24% of those surveyed expect to spend some money on decorations for their home or office. Next comes Easter Sunday (April 8), for which consumers plan to shell out $135 apiece (on average), and some of this spending may occur in March.
The Retail HOLDRS ETF (NYSE:RTH) is up a fraction in morning trading today. Some of the outperforming names in the sector so for this session include Pacific Sunwear (NASDAQ:PSUN) — which reports earnings after today’s close — Lowe’s (NYSE:LOW), Barnes & Noble (NYSE:BKS) and Office Depot (NYSE:ODP).
As of this writing, Beth Gaston Moon does not own any shares mentioned here.
