The upbeat earnings reports issued by retailers yesterday would have seemed inscrutable, had we not been buying merchandise ourselves hand-over-fist during the month of March. Our non-cash household purchases were all made on a single Master Card, and, for sure, the latest monthly bill was a whopper. It included a spring ski vacation, a set of Michelins, a porcelain crown and subscription tickets for next year’s season at the Denver Theatre Center.  But who could have imagined that millions of Americans would join us in shopping up a storm?  Our excuse is that the guru business has been good. Great, actually. But we have many friends who have been struggling through the Great Recession, and even the ones who have managed to keep their heads above water have succeeded in part by cutting back on household spending.

So how to explain the impressive results turned in not only by high-end sellers such as Nordstrom’s, but by mid-level department stores like Kohl’s?  Sales there rose 22.5 percent for stores open at least a year, and Nordstrom’s led its group with a 16.8 percent jump. Its competitors did strong business as well: Saks reported same-store gains of 12.7%, and both Neiman Marcus and Bergdorf’s were up 9.2%. Women’s clothing, shoes, handbags and jewelry were the most popular items.

A Pleasant Surprise

This is hard to square with first-hand impressions gleaned at the local mall. The place usually feels pretty empty except on weekends, and the aisle traffic at Nordstrom’s, the shopping facility’s largest tenant, nearly always seems sparse. Still, it comes as a pleasant surprise that Nordstrom’s numbers have improved. It is one of the very few retailers that still does business the old-fashioned way, putting knowledgeable salespeople on the floor, selling high-quality goods, and standing behind everything they sell 100%.

News accounts of the pick-up in shopping were cautiously optimistic, reflecting the outlook of the stores themselves. “We are celebrating the strength of the first quarter,” said a Target spokesman, “but we are not taking anything for granted. I think the rest of the year’s sales will have ups and downs, but the general trend line will be up.  Target recorded a jump of 10.3% in March.  Coincidentally, Rick’s Picks initiated a short position in the company’s stock yesterday when it rallied 6 percent intraday, achieving a long-term price objective and then some.  We bought May 55 put options for 1.40, and it felt like we were bucking the tide. Will the uptick in the retail sector turn out to have been just a fleeting outbreak of spring fever?  Ask us again in May.  

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-- Posted Friday, 9 April 2010 | Digg This Article