Registers are ringing.
Every month, retailers report same-store sales. This is the amount of sales a company has made in a given month. It is called same-store sales because the number is compared with the same month a year ago and for the same number of stores. So, if a retailer in February 2011 only had 25 stores, and in Feb 2012 it has 45 stores, the number is adjusted to reflect this.
Wall Street watches these reports closely. Here’s why: the reports can offer clues about how healthy the consumer and economy are. If people are spending money, it may mean they feel confident about their current and future financial situation. Investors are keeping a close eye on the reports also. If a retailer has strong sales figures, investors may want to buy some of that company’s stock. On the flipside, a bad same-store sales report could mean trouble ahead.
For February, Gap, the nation’s largest clothing company, said sales rose 4% . Analysts who follow Gap expected sales to fall 1.4%, so this was a huge, positive surprise. There is a similar story at Target where same-store sales rose 7%, compared with a 5% forecasted increase.
Retail analysts (people whose job it is to keep an eye on everything in the retail sector) say that warmer weather helped boost sales. Shoppers wanted to get a jump on spring shopping, and stores helped by stocking shelves with new products.
Are retail stocks in fashion on Wall Street? Ooh la la….
Peace, Love & Profits