There are a lot of reasons why consumers aren't spending. High unemployment. Rising gasoline prices. Uncertainty about the economy. Yet consumers shopped last month and bought a lot of stuff. Same-stores sales for the majority of the nation's biggest retailers blew past expectations in February.
The Gap (GPS) reported same-store sales rose four percent - the company's first monthly sales increase since last June. Sales at both Macy's(M) and Costco (COST) jumped eight percent. Target (T) posted a gain of seven percent. For the 18 retailers reporting results, February same-store sales grew 6.5 percent, handily beating the three percentage point estimate.
Is February an anomaly?
Not at all, according to Jeff Macke, the host of Yahoo!'s Breakout show. In an interview with The Daily Ticker's Aaron Task, Macke says economic naysayers cannot discount February's positive retail numbers. More companies are hiring, the stock market has rallied nearly 10 percent since the beginning of the year, and consumers are finally feeling confident about the economic recovery and their personal finances, he says.
"Consumers care about jobs," Macke argued. "We shopped. The facts are the economy is improving and retail sales are strong. Deal with it."
Macke points to the Gap as proof that February's solid sales were no fluke. The retailer was expected to post negative sales for the month but surprised investors with a four percent increase. The Gap's Banana Republic unit also crushed estimates, reporting a 12 percent increase in sales; analysts were expecting a small rise of 2.9 percent.
"The Gap is not a good enough company to beat same-store sales expectations without a tailwind," Macke says.
Solid Valentine's Day holiday sales and discounts during the President's Day holiday also added to retailers' bottom line last month.
As for buying shares of retailers, Macke urges caution. "Don't chase these stocks here," he tells Aaron is the accompanying video. Macke personally owns Costco and auto retailers AutoZone (AZO) and Sonic Automotive (SAH). He notes that Wal-Mart's (WMT) decision to increase its dividend by nearly nine percent is a bullish sign for the company.
- Jeff Macke