A number of factors led most experts to predict that March retail revenue would be below dismal, but that didn’t occur. Poor performance was foretold due to adverse weather, rising gas costs and an unusually late Easter. But a number of factors resulted in a moderately pleasant surprise for anybody who cares.
The retail sale measuring
U.S. retailers reported a 1.7 percent year-over-year increase in retail sales last month, according to a Thomson Reuters survey of 25 national retail chains. Stores involved in the numbers have been open since last March at the very least. The metric, known as “same-store sales,” is considered a reliable measure of retail performance because sales anomalies due to store openings and closings are not a factor. But experts doubt whether the March increase is a solid trend in consumer demand. There are increasing grocery and gas costs. The consumer spending is anticipated to be effected by these changes. Plus, only 10 percent of retailers report monthly revenue figures. It could be easier to determine how the customer economy is when bigger corporations start to post quarterly sales. This will include businesses such as Home Depot, Best Purchase and Wal-Mart.
Many want Easter shopping out of the way
An increase in March retail sales was anticipated. The Easter holiday was why this was expected. This year Easter falls on April 24; three weeks later than past year and the latest Easter in decades. Easter purchasing is moved from March past year to April this year. Figuring out year-over-year retail sales caused experts to create a new period called "Mapril." This was for the Easter holiday. Some in the industry expect this year’s later Easter date would give retailers an additional boost in April revenue. A 5 to 6 percent increase in April was anticipated by the International Council of Buying Centers. But a fragile economic recovery hit by increasing food, gas and commodity costs, plus a depressed housing market and tenuous employment picture could mean that Mapril retail revenue will surprise experts in the opposite direction they did in March.
Retail stock is also fun
All the talk of the march retail sales increase has gotten several excited. Some say that there should not be excitement though. According to Jeff Macke at Yahoo! Finance, investors should nevertheless be wary of retail stock. In order to offset rising costs, retailers increase costs. This doesn't change the profit margin at all while the sales figures become inflated. There were larger clearance sales than normal too after the demand went down over the winter. The expectations were really low too. It may not mean anything to beat them. After the Easter bump, malls could empty and margins could shrink as consumers feel the pinch of food and gas inflation.
Articles cited
Los Angeles Times
latimes.com/business/la-fi-retail-sales-20110408,0,816255.story
MSN Money
money.msn.com/business-news/article.aspx?feed=OBR&date=20110407&id=13280589
Yahoo! Finance
finance.yahoo.com/blogs/breakout/same-store-retail-sales-sell-news-20110407-073322-455.html?sec=topStories&pos=5&asset=&ccode=
Market Watch
marketwatch.com/story/retail-sales-defy-conventional-wisdom-2011-04-07
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