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Consumers finally show signs of life

Retail sales' most robust monthly gain in a year and a look ahead to several of the big-box stores scheduled to report earnings next week are giving investors renewed hope that the consumer hasn't completely shut down.

Following a cascade of dreadful reports from the department store set, which included the worst comparable sales declines that Macy's, Kohl's, Dillard's and Nordstrom have posted since the latest recession, government data showed that retail sales increased a seasonally adjusted 1.3 percent over March. That topped Reuters forecast of 0.8 percent growth.

Notably, even when stripping out automobiles, gasoline and building materials, retail sales still rose 0.9 percent compared with last month. Compared with last year, total retail sales were 3 percent higher on a seasonably adjusted basis, according to the Census Bureau.

The results stood in stark contrast to fear-inducing reports coming out of department stores this week, which were rounded out by J.C. Penney's revenue miss on Friday. And with retailers including TJX, Home Depot and Lowe's on deck to report first-quarter earnings next week, analysts will be looking for further evidence that retail's malaise is more specific to department stores and apparel.

"It is important to remember that this week's updates have been dominated by department stores: a particularly challenged segment of the retail sector, and one with heavy exposure to apparel, which has struggled thanks to unseasonal weather," Neil Saunders, CEO of Conlumino retail research firm, told investors.

Indeed, a closer look at April's retail sales figure highlights that many of the sector's shortfalls stem from the department store space. Last month, sales at these big-box locations fell 1.7 percent on a seasonally adjusted basis compared with last year. Even sales at apparel and accessories stores, which like department stores would be vulnerable to the month's unseasonably cool weather, posted a small gain on a seasonally adjusted basis.

Meanwhile, furniture and home furnishings sales were up 5.6 percent during the first four months of the year, and revenues at home improvement stores continued to improve. That bodes well for Home Depot and Lowe's, which are slated to report earnings on Tuesday and Wednesday, respectively. Analysts are expecting both retailers to report same-store sales gains north of 4 percent, according to Thomson Reuters.

Also on tap to release first-quarter results next week are off-price chains TJX and Ross. These retailers, which sell name-brand apparel for less, have grown at the expense of traditional department stores. Thomson Reuters forecasts predict these two companies will report low-single-digit comparable sales gains.

Ken Perkins, president of Retail Metrics, told CNBC Thursday he would be "much more alarmed" about retail and the state of the consumer if these heavyweights, which have so far performed in a tough environment, were to post soft numbers.

"It pushes it into a, 'Wow, what is going on with the consumer?'" he said.

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Cyrus McCrimmon | The Denver Post | Getty Images

Department stores, however, shouldn't shoulder all the blame for the sector's recent bloodbath. Victoria's Secret parent L Brands last week reported a rare comparable sales miss during the month of April. Gap, which has been struggling to gain traction at its namesake, Banana Republic and Old Navy brands, warned on Monday that its first-quarter revenue and profits would fall short of Wall Street's forecasts. And trends at watchmaker Fossil continued to deteriorate in the face of the shift to wearables.

Perkins said he is keeping an eye on results at Target and Wal-Mart, which report Wednesday and Thursday, respectively. Though macroeconomic shifts including minimum wage hikes should stand to benefit their consumer bases — Wal-Mart's, in particular — it's tough to gauge how much apparel's shortfalls weighed on these two players, Perkins said.

The internet also continues to gobble up share, with sales at so-called non-store retailers gaining 10.2 percent in April on the year. Following Macy's miss on Wednesday, Cowen & Company reiterated its view that Amazon will surpass the department store to become the No. 1 U.S. apparel retailer by next year. According to a separate report by Forrester Research, Amazon's U.S. retail business accounted for 60 percent of total online growth between 2014 and 2015.

Although times remain tough for traditional retailers, economists said Friday's government data proves the consumer is still out there.

"The retail sales report shows that recent claims of the demise of the U.S. consumer have been greatly exaggerated," said Steve Murphy, U.S. economist at Capital Economics.