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Same-Store Sales Growth Springs Up Again

An early Easter and warm weather keep the happy streak going


Options Trading Picks - Retail Stocks to ShortTotal retail sales across the board (well, from the 21 chains that still report monthly data) came in at $35.7 billion in March, up 6% from the previous year. Same-store sales, meanwhile, rose 4.4% year-over-year, marking the 31st consecutive increase and topping the consensus projection of 3.3%. Excluding the drugstore group — negatively impacted due to Walgreens’ (NYSE:WAG) loss of the Express Scripts network — same-store sales rose 6.8% from last year.

Reasons for this lift in the retail sector were familiar: warm weather, improved consumer confidence and an earlier Easter, which forced consumers into the stores for basket-filling trinkets and festive spring clothing. In fact, Easter spending is projected to rise 11% from last year, to $145.28 per person (that’s a lot of Cadbury Creme Eggs). But the calendar giveth and the calendar taketh away — analysts are warning that a rather late Mother’s Day could mean slower sales in April. (It all evens out in the end, doesn’t it?)

Regardless of when certain holidays fall, March is traditionally an important month for retailers as people begin to think about spring wardrobes. According to a Barclays analyst, the third month of the year accounts for 40% of retailers’ first-quarter sales and 9% of annual sales (on average).

Winners and Losers

Target (NYSE:TGT) is making headlines today. Not only did the discount chain’s sales rise 7.3%, beating estimates of 5.4%, but it lifted its first-quarter earnings forecast by a few pennies. Gap (NYSE:GPS) is also a big winner, reporting a sales increase of 8%, versus estimates of 5.4% growth. Old Navy was the company’s strongest segment, with sales rising 11% at the lower-priced chain, versus 5% growth at the tonier Banana Republic.

On the department-store front, Macy’s (NYSE:M) managed a positive surprise, with same-store sales rising 7.3%. April sales are projected to tick only 1% to 1.3% higher, however, since everyone shopped for Easter in March and will do their Mother’s Day shopping in May. Elsewhere, Kohl’s (NYSE:KSS) said sales rose 3.6% (versus an expected increase of 2.1%), and Saks (NYSE:SKS) matched analysts’ expectations with a sales boost of 6.3%.

Costco Wholesale (NASDAQ:COST) managed to disappoint, as its sales increase of 6% fell short of the 6.7% estimate. Buckle (NYSE:BKE) also failed to deliver, with sales rising just 6.4%, versus the expected 8.8% surge. BKE is bringing up the rear in the retail sector today; the shares are down more than 6%. COST is only off about a half-percent.

BBBY Soars Beyond Earnings Estimates

In other news out of the retailing sector, Bed Bath & Beyond (NASDAQ:BBBY) is in rally mode today after reporting fourth-quarter earnings that were 32% above year-ago results. Earnings per share were also 11% better than analysts’ estimates ($1.48, versus $1.33). The chain’s full-year sales, meanwhile, were up 8.5%, while same-store sales for the reporting quarter chugged 6.8% higher.

The stock is trading 8% higher today (the top mover in the retail sector) and is at a new all-time peak. BBBY has gained more than 60% in the past two years.

The SPDR S&P Retail ETF (NYSE:XRT) is up about a half-percent today and is challenging a new 52-week high. 

As of this writing, Beth Gaston Moon does not own any shares mentioned here.

Article printed from InvestorPlace Media,

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