March Retail Sales Strong...Now for the Bad News

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March retail sales strong: March same-store sales up 3.9 percent, well above estimates of 3.3 percent, according to RetailMetrics.

Strength across the board: Sales at Macy's, Gap, Ross Stores, Limited Brands, Kohl’s, TJX Cos., and Target (which also raised first-quarter earnings guidance) all well above expectations.

Kohl’s CEO Kevin Mansell summed it up: “Warmer weather and an earlier Easter combined to help improve our sales trend.”

One slight disappointment: Costco Wholesale up 6 percent, slightly below expectations of 6.7 percent, but the nation's largest warehouse retailer was up against very difficult comps: March was spectacular in the prior last two years, up 23 percent in the last two years combined (up 10 percent in 2010; up 13 percent in 2011).

Now for the bad news: a) the Street has long priced in these strong numbers and most are at or near new highs; b) the warm weather, such a boon for the last three months, may have pulled some numbers forward; and c) April comps are tough — April same-store were up 8.7 percent last year, according to RetailMetrics, because Easter was two weeks later, toward the end of March.

Here's the thing that bugs me most: There are now only about 20 retailers that report monthly same-store sales. There are roughly 120 retailers that are publicly traded! And Wal-Mart Stores and Home Depot, the two biggest, don't report! And now, J.C. Penney is dropping out from monthly reporting!



1) Budget cuts are less painful than a bailout. That, according to Spanish Prime Minister Mariano Rajoy, saying Spain faced a situation of "extreme difficulty."

2) China up 1.7 percent! Well, it was off for a holiday yesterday, but word that China would allow more foreign investment in its capital markets has definitely spiked the markets. Let's face it: The Chinese could use more long-term boring global pension fund managers investing and less short-term local investors.

Ever been to a local Chinese brokerage office? I have, in Shanghai. It looked like an Off-Track Betting operation: Screens up everywhere, lots of locals scribbling on pieces of paper, and running up the cages to make bets. Substitute stock prices for horses, and you get the point.

3) Retail reports not bad: Pier 1 Imports shares are unchanged pre-market after the home décor company reported better-than-expected fourth-quarter earnings, boosted by a one-time tax benefit and comparable store sales increase of 10.3 percent due to more store traffic. Pier 1 Imports reported fourth-quarter earnings per share of $1.04, versus analysts’ $0.48 estimate. The company expects 2013 earnings to be in the range of $1.06 and $1.12 per share, plus an additional $0.01 to $0.02 from a 53rd week included in 2013’s operating results. The Street is expecting full-year earnings per share of $1.12.

4) Bed Bath & Beyond: The retailer earned $1.48 per share for its fourth quarter, 15 cents above estimates. Overall sales were in line with consensus, but same-store sales beat forecasts despite profit margin pressures.

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