Target still expects a healthy showing in April to prop up the figure, creating a gain in comps between 4% and 6% for the two months combined.
What makes Target so upbeat about April? Ask the Easter Bunny. Really. The Easter holiday has traditionally been a busy shopping season. With schools out -- some on holiday for as long as a week and a half -- Easter Sunday itself comes on the heels of some pretty active shopping days.
The catch here is that the Easter calendar fluctuates. Some years, like 2005, will find Easter falling in March. This year, the bunny arrives in April. For the most part, the holiday's timing is inconsequential to retailers that live off fiscal years ending in January. Since their fiscal first quarters end in April, they've got Easter covered whether it falls in March or April.
It's a different story for companies that are just as affected by seasonality, but split quarters at the end of March. The Easter holiday season often affects family-based tourist draws like Disney (NYSE:DIS) and Six Flags (NYSE:PKS).
Restaurants also get an extra boost when Easter rolls around. Cheesecake Factory's (NASDAQ:CAKE) enviable streak of posting higher quarterly comps ended at 42 in the spring of 2003, after the company was tripped up by a late Easter holiday. So if you own shares in a consumer-driven retail institution that happens to work off a calendar year, temper your expectations for the current quarter, because the company will be comparing an Easter-less March quarter in 2006 to one that included the holiday a year earlier.
Don't let the low March comps at Target freak you out. Even Wal-Mart (NYSE:WMT) posted the same 1% to 3% projected March comps gain earlier this month. It, too, expects substantial improvement in April.
Yes, Virginia, there is an Easter Bunny. And when he bounces, the ground moves.
Longtime Fool contributor Rick Munarriz spends a fair deal of time at area Target stores. Just don't call him a cheapskate. He does own shares in Cheesecake Factory and Disney. The Foolhas a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
