Thursday, April 7, 2011
Stock Market: The Surprising Consumer
The so called experts predicted that the same-store sales (excluding new shops) declined last month by 0.7%. Instead, the retailers posted an aggregate gain of 1.7%. In fact, 82% of retailers beat estimates. Discounters posted the best performance, with a 3.9% overall same store sales gain.
Costco (COST) posted a 13% year-over-year gain, beating expectations for 7.4%. Saks (SKS) sales grew 11.1%, better than expectations for 0.8% growth. Limited Brands (LTD) posted a 14% gain, against expectations for 1.5%. Zumiez (ZUMZ) and The Buckle (BKE) also outperformed handily.
The reason for the pessimistic predictions were rising food, cotton and gasoline prices, a slowly recovering job market and a bleak housing market. Analysts also quoted the late Easter holiday, which will falls on April 24. This means that this year the pre-Easter shopping moves in April. But the numbers show that the consumer is much more optimistic and free-spending than analysts think.
This is also good news for the stock market, not just for retail stocks, because the consumer is the motor of the whole economy.