Stock Market: The Surprising Consumer

The world is very unsure and insecure, don`t we know it!  But there is one factor on which we can rely: The US Consumer. This morning we got US retail sales from March. The retailers reported much better numbers than the pessimistic analysts predicted.

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.