Investors went on a shopping spree in retail stocks and
Thursday after March same-store sales met expectations and the
number of people filing for unemployment benefits dropped
sharply, reversing last week's jump.
But the numbers should be put in perspective, a contrarian
SPDR S&P Retail ETF (
) surged 2% to an all-time high of 72.95 in heavy volume. The
fund holds nearly 100 equal-weighted companies -- both online and
brick-and-mortar -- that sell apparel, auto supplies, food,
consumer electronics, drugs and specialty goods.
XRT has rallied 17% year to date vs. 12% for SPDR S&P 500
Teen apparel sellerZumiez (
) surged 13% to 28.33, a five-month high, in nearly six times
average trade. Its March same-store sales climbed 2.1% over the
year-ago period, eclipsing analyst expectations of an 8% drop.
Credit Suisse raised its price target while rating the stock
Department-store discounterRoss Stores (
) shot up 6% to 63.80, a six-month high. Same-store sales rose 2%
year over year, while analysts expected a 1% drop. It guided in
the high end of its previously announced earnings range of $1.00
to $1.04 a share for the first quarter.
) vaulted 18% to a 52-week high of 2.12 in 6-1/2 times average
volume. The third-largest U.S. drugstore chain reported its first
annual profit in six years and expects to do so again in the
current fiscal year.
Earnings per share for fiscal 2013 hit 12 cents a share.
Analysts polled by Thomson Reuters expected EPS of 4 cents.
Revenue slipped 2.8% to $25.4 billion vs. analyst forecasts of
Rite Aid forecast earnings of 4 cents to 20 cents a share for
this year on sales of $24.9 billion to $25.3 billion. Credit
Suisse rated the stock outperform and increased its price target
owing to strong generic drug sales and health care reform.
March same-store sales overall rose 1.5% from the year-ago
period, meeting forecasts, Retail Metrics reported. Harsh
weather, Easter coming earlier than last year and higher payroll
taxes hurt sales, offsetting the pluses of rising home and stock
prices, falling gas prices and modest jobs, the research firm
stated in a report.
Retailers have increased same-store sales for 43 months
straight. The International Council of Shopping Centers projects
April same-store sales to rise 2%-3% in total and 3%-4% excluding
Retail sales actually declined after factoring in annual
inflation of 2%, said John Williams, an economist and founder of
ShadowStats.com. Consumers, whose spending accounts for 70% of
the economy, don't have the ability to fuel sustainable economic
growth because incomes on average aren't growing faster than the
And consumers can't borrow as much as they used to because of
stricter lending standards resulting from the debt crisis, he
Weekly jobless claims fell 42,000 from last week to 346,000.
But Williams deems that data "absolutely worthless" because the
Department of Labor doesn't have the ability to adjust weekly
data to account for Easter and Good Friday, and the pace of
hiring is slowing. "We're still in the most severe economic
contraction since the Great Depression," Williams said.