April comp sales look “less bad”

Like so many other economic indicators right now, April same-store sales look “less bad” than during the past several months. These are the indicators of a “bottom” to the recession (we all hope) that have driven equity markets about 33% higher since early March. Still, there is no reason for dancing in the streets just yet.

April results show how Easter is a double-edged sword when it moves from one month to the next: On the one hand, businesses driven by the holiday (kids’ clothing, candy, etc.) spike up in sync with the calendar. On the other hand, most stores take a volume hit if they keep their doors closed on Easter Sunday. This year the “lost day” fell into April and seemed to affect some stores more than others.

The discounters looked strong in April, with Walmart leading the pack and Target showing a positive comp. Warehouse clubs were surprisingly soft, mid-tier stores like JCPenney and Macy’s did “less badly” (and have raised their quarterly earnings expectations), and luxury retail trailed the pack. Most middle-market stores have done a good job adjusting their inventory and expense plans to very low expectations, so any recovery in comp sales during the second half will drive a big earnings spike.

It may be a sign of recovery that middle-market apparel specialists have come back from their worst comps. The stores most focused on value did the best (are you listening, A&F?) but any sign of more active discretionary spending is a good thing.


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