Why Retail Stocks Are Soaring

It's warming up to be a good year for retailers. Sales data was particularly bright for Target (NYSE: TGT  ) , Gap (NYSE: GPS  ) , and Macy's (NYSE: M  ) as they beat analysts' expectations for the month of March. According to Retail Sails, the 21 stores that have reported saw total net sales climb 6% from the same period a year ago. As you might imagine, same-store sales also spiked higher -- increasing 6.8% with the exclusion of drugstores. Here's a look at who came out on top.  

Bull's-eye
Discount retailer Target enjoyed stronger-than-expected sales. March comps were up 7.3% ahead of estimates for an increase of just 5.7% for the month. CEO Gregg Steinhafel thanked the early arrival of Easter and unseasonably warm weather for the sales boost. I think Target will continue to surprise analysts with strong performance in the months ahead, which is why the stock has long been one of my top picks in Motley Fool CAPS.

The real shocker was Gap's 8% gain, which nearly doubled estimates of 4.6% according to research from Retail Metrics. This is even more impressive considering that the country's largest apparel chain reported a 10% decline in same-store sales a year ago. Another leader, although less surprising than Gap, was Macy's, with a 7.3% spike in same-store sales for the month. Analysts had expected just 4.8% for the department-store chain.

Let's look at the monthly performance for five of the leading retailers for the March period.

Company

March 2012 Sales

YoY Change

Costco (Nasdaq: COST  ) $9,130 million 9.6%
Gap $1,460 million 9.8%
Kohl's (NYSE: KSS  ) $1,815 million 5.3%
Macy's $2,358 million 6.9%
Target $6,427 million 7.9%

Source: Retail Sails.

Discounter Kohl's came in strong, with comps increasing 3.6%, compared with a 6.5% decline the previous year. The retailer continues to open new stores and should be able to maintain its momentum going forward. Meanwhile, although Costco tops the chart in terms of monthly sales, its March numbers fell short of analysts' expectations. The wholesaler missed forecasts for same-store sales of 6.5%, instead posting a mild gain of 6% for the period. I expect Costco to gain speed moving into the summer months, despite the company's slow start.

It's shaping up to be a promising year for retail stocks, and investors are taking notice. Add these stocks to MyWatchlist, The Motley Fool's free tool, so that you can track and monitor their performance in the months ahead.

Fool contributor Tamara Rutter owns shares of Target. The Motley Fool owns shares of Costco Wholesale. Motley Fool newsletter services have recommended buying shares of Costco Wholesale. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1856791, ~/Articles/ArticleHandler.aspx, 9/22/2014 10:19:32 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,253.86 -25.88 -0.15%
S&P 500 2,005.17 -5.23 -0.26%
NASD 4,553.67 -26.12 -0.57%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/22/2014 10:03 AM
COST $126.05 Down -0.45 -0.36%
Costco Wholesale CAPS Rating: *****
GPS $43.71 Down -0.19 -0.43%
Gap CAPS Rating: ***
KSS $61.89 Down -0.10 -0.16%
Kohl's Corp CAPS Rating: ***
M $59.99 Down -0.11 -0.18%
Macy's, Inc. CAPS Rating: **
TGT $63.45 Down -0.36 -0.56%
Target CAPS Rating: ***

Advertisement