Retail Sales
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Can Improved U.S. Retail Sales Continue In 2013?
The Commerce Department released its U.S. retail sales survey for December this morning (Tuesday) showing an unexpected increase - but does this gain have enough support to repeat in 2013?
Total retail sales were up by 0.5% compared with November, more than doubling the 0.2% average growth forecast by economists surveyed by Bloomberg.
The department noted U.S. retail sales would have been up by 0.8% if it had not been for a 14 cent-per-gallon decline in the average price of gasoline, which resulted in a 1.6% drop in sales at gas stations.
Why U.S. Retail Sales Improved
The increased U.S. retail sales came as an improved employment picture boosted incomes.
At the same time, housing prices are beginning to recover nationwide and this has led to an increase in housing construction activity. That's because a better outlook for housing construction means more demand for pickups and other light trucks.
"There's a big correlation between auto sales and housing starts," GM Treasurer Jim Davlin told Reuters. "The pickup truck market share is at historical lows. We would expect that to come back."
Sales of autos and auto parts were up by 1.6% month-on-month, the best performing category within the retail sector. December capped the best year for automobile sales since 2007.
U.S. retail sales excluding automobiles were up by 0.3%, also beating economists' estimates, compared with a 0.1% decline in November. Sales of furniture were up 1.4% from November while sales at clothing chains increased by 1.0%.
Core retail sales, which most closely correspond to the consumption component of gross domestic product (GDP,) also were up in December, by 0.6% after a 0.5% increase in November. Core retail sales exclude sales of automobiles, gasoline and building materials.
But the new tax law changes in 2013 threaten a continued recovery in U.S. retail sales...
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The Weakest Holiday Sales Growth Since 2008 Means It's Time to Short These Retailers
Initial U.S. retail sales figures released on Wednesday showed sales growth for the holiday season was the worst since 2008.
According to MasterCard SpendingPulse, holiday sales posted a paltry 0.7% increase against expectations of a 3-4% gain. That's below the same period last year when sales grew at a 2% pace.
Analysts looking for a convenient excuse have been quick to blame Hurricane Sandy. But in reality, there's something else much bigger at work here.
That's why I'm actively hunting for shorts in the retail sector right now and will be for much of the first quarter next year.
Following the holiday data and some moderate earnings that incorporate the extra week this quarter, I simply don't think hard-core retail companies like the The Gap (NYSE: GPS), American Eagle Outfitters (NYSE: AEO), The TJX Companies (NYSE: TJX), and Abercrombie and Fitch Co. (NYSE: ANF) – which are up 71.3%, 47.41%, 32.2% and 50.67% respectively year to date through Christmas Eve – will be able to sustain these big up moves.
In fact, there are several real reasons why I think holiday sales were down and consumer spending will continue to drop into 2013, making select retailers good short candidates:
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Black Friday Shopping 2012 Gets Even Crazier and Angrier
Black Friday shopping typically involves the most inventive, discounted sales of the year.
This year, with waning sales, stiff competition and the new trend of comparison shopping via smartphone apps, both brick-and-mortar and online retailers are pulling out all the stops to win over customers.
According to a recent consumer survey by the bargain website DealNews.com, just 2% of Black Friday shoppers will shop solely in stores, while 28% will shop purely online. But retailers aim to change that stat.
New services offered this year by brick-and-mortar stores include: reserved parking spots, complimentary food and drink, survival kits of energy bars, water and coffee coupons, safe stations that will hold people's packages while they peruse and spend, and security guard escorts who will personally carry loads of gifts to parked cars.
At Mall of America in Bloomington, MN, a tailor shop will check coats for a $1, with proceeds collected benefiting the Make-A-Wish Foundation and the Salvation Army.
Some of the more upscale stores are even offering VIP lounges where shoppers can nosh, nibble, receive complimentary goodie bags, and relax until they feel rested enough to again face the maddening crowds.
John D. Morris, a senior retail analyst with BMO Capital Markets told The Wall Street Journal of this move by retailers, "It's their way of telling shoppers, "We feel your pain.'"
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These Are the Retailers to Watch This Earnings Season
There are a handful of savvy retailers that prepared for the tough economy by positioning themselves to profit - and now they're being rewarded with blockbuster earnings.
So far this earnings season, more than half of retailers have beat analysts' estimates for same-store sales, according to a Thomson Reuters survey.
These earnings season winners have streamlined inventories and catered to the consumers who are still spending - and the efforts have paid off. They're exceeding sales expectations, watching their stocks climb, and are expected to continue the streak in future quarters - meaning profit opportunities for investors.
Here are the companies coming out on top of the retail sector.
Discounters Deliver Profits
Discount retailers continue to profit from price-conscious consumers, and many chains saw a solid boost from a healthy back-to-school shopping season.
"Despite being buffeted by the winds of inflation, [Hurricane] Irene and unemployment, this back-to-school season was the best since 2006," Craig Johnson, president of retail consultant Customer Growth Partners, told Reuters.
One of the best performing discount retailers so far has been Family Dollar Stores Inc. (NYSE: FDO), which reported record sales and earnings for the fourth quarter and fiscal year ended Aug. 27. Net sales for the quarter were up 9.1% from the year before to $2.13 billion, with sales totaling $5.55 billion for the whole year.
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U.S. Retailers Hoping Black Friday Sales, Smartphone Apps Fuel Strong Holiday Shopping Season
Another Black Friday. Another holiday shopping season. But a whole new strategy for U.S. retailers. As the Friday after the Thanksgiving holiday, today marks the "official" kickoff of the 2010 holiday shopping season. Usually referred to as "Black Friday," today is the day when U.S. retailers traditionally pull out all the stops in an effort [...]
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Three Ways to Brace for a Double-Dip Recession
Economists are torn... Is the U.S. economy on the upswing? Or are we facing the dreaded "double dip recession"? Either way, there are a few things every smart investor needs to do now to protect their nest eggs. Find out what you should do in this free report.
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Three Ways to Brace for a Double-Dip Recession: Recession-Proof Stocks
Today (Friday) we conclude our series on bracing for a double-dip recession.
In Part I of this investment series, "Three Ways to Brace for a Double-Dip Recession: Going for the Gold," we discussed ways investors could safeguard against the imminent decline of the U.S. dollar by buying gold.
In Part II, "Three Ways to Brace for a Double-Dip Recession: Going Global," we explored potential investments in foreign countries that have more stable economies and better growth prospects.
And today, we're going to conclude by looking at "recession-proof" stocks right here in the United States.
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Consumers Buck Economic Trends to Help Retail Sales Post Fastest Growth in Four Years
The American consumer bucked strong economic headwinds to help retail sales post the fastest growth in four years, a report is expected to show today (Thursday), boosting optimism that shoppers are overcoming concerns about unemployment and a slumping housing market.
Sales are expected to come in at the upper end of a range between 3-4% for the first five months of the retail fiscal year that began Jan. 31, the biggest gain since 2006, the International Council of Shopping Centers (ICSC) said in advance of its June report.
The biggest gain in retail sales since 2006 could be a signal that consumers are weathering last month's drop in consumer confidence and are not as concerned as analysts feared about the economic rebound.
