Retail Alert: Caution on March Same Store Sales Gains (COST, JCP, KSS, LTD, M, JWN, TGT)

Investors are going to get to see some very pleasant surprises on the same store sales data for the month of March 2010 from major retailers.  The media will likely tout this as further evidence of a significant recovery.  That is, of course, true.  But… some caution is warranted.  You have to consider that March 2009 was the peak of the market panic, and that was the month that many consumers were buying metals, bullets, and food rations rather than shopping for shoes, shirts, and purses.

This will be very interesting when we see the expected gains in sales from large companies such as Costco Wholesale Corporation (NASDAQ: COST), J. C. Penney Company, Inc. (NYSE: JCP), Kohl’s Corporation (NYSE: KSS), Limited Brands, Inc. (NYSE: LTD), Macy’s, Inc. (NYSE: M), Nordstrom, Inc. (NYSE: JWN), and Target Corp. (NYSE: TGT).  These are in alphabetical order to avoid any other ‘order and ranking’ issues.  These are some of the key stocks in retail that investors and traders use as the go-to stocks when it comes to same-store sales.  We also screened out those companies which were in turnarounds or significant restructurings to avoid any skewed data.  Again, this is only same-store sales data as that is the metric used for the growth analysis.  We have also shown how much these are up from the lows seen last March as well.

Costco Wholesale Corporation (NASDAQ: COST) comparable sales in March 2009 were -5%, but that was -2% on U.S. stores, and the company showed that those would have been up outside of gas prices being so different from 2008.  Comparable store sales in March 2008 were up 7%, but that figure was up 5% for U.S. same store sales.  Shares today are around $61.00 versus a March 2009 low closing price of $37.92.

J. C. Penney Company, Inc. (NYSE:JCP) March 2009 comparable store sales decreased 7.2 percent; March 2008 comparable store sales decreased 12.3 percent.  Shares today are around $33.50 versus a March 2009 low closing price of $13.76.

Kohl’s Corporation (NYSE: KSS) March 2009 comparable store sales decreased 4.3 percent; March 2008 comparable store sales decreased 11.1 percent.  Shares today are around $57.30 versus a March 2009 low closing price of $33.58.

Limited Brands, Inc. (NYSE: LTD) reported March 2009 comparable store sales showed a decrease of 9 percent; March 2008 comparable store sales decreased 8 percent.  Shares today are around $25.70 versus a March 2009 low closing price of $6.03.

Macy’s, Inc. (NYSE: M) March 2009 same store sales were down 9.2 percent; data conflict in March 2008 over 2007.  Shares today are around $22.50 versus a March 2009 low closing price of $6.45.

Nordstrom, Inc. (NYSE: JWN) comparable store sales for March 2009 decreased 13.5 percent; March 2008 comparable store sales were -9.1%.  Shares today are around $42.50 versus a March 2009 low closing price of $11.89.

Target Corp. (NYSE: TGT) March 2009 comparable-store sales declined 6.3 percent; March 2008 comparable store sales decreased 4.4 percent.  Shares today are around $53.50 versus a March 2009 low closing price of $25.99.

We will be updating our consensus data for same-store sales this evening due to errors and conflicting consensus data from source to source.  Many are expected to show nearly double-digit gains on a comparable stores basis.  Usually those final figures are updated in the last 24 hours ahead of the same-store sales reports that will start coming Wednesday morning.

While this is titled “Beware Same Store Sales Gains…” it is of course not bad news.  But the numbers are going to look large and it needs to be remembered what the public was talking about and spending their money on a year ago in March 2009 versus March 2010.  It also needs to be considered that many of even the larger names are up exponentially from their March 2009 lows.

Is the calculation in retail the only measurement of extremes?  No.  The same can be said for corporate earnings, GDP, auto sales, and more.

JON C. OGG