–Sector Building Impressive Momentum
–Home-Goods Showing Strength

By Mark Pender

NEW YORK (MNI) – MNI’s retail trade index edged very slightly back
in the May 1 period to 60.9, far above break-even 50 to indicate
significant year-on-year strength for the sector, according to Market
News International’s weekly survey.

Sales readings continue to move beyond the sample’s targets of
+3.0% for year-on-year total sales and +1.5% for same-store sales. Total
sales are currently at +5.5% with same-store sales at +3.8%.

But sales readings are likely inflated by noise. This sample tracks
estimates and trends making a discrete reading for a calendar-skewed
month, like April with the early Easter, difficult to isolate.

Isolated returns on April are so far mixed. Some chains say sales
rates were steady, which would point to a big gain for adjusted monthly
sales, but others say sales declined.

Whatever April’s adjusted results turn out to be, many chains are
reporting fundamental improvement in consumer demand. In more than four
years of data, the index’s four-week average is at a record 59.1.

Distribution of strength is very deep with one-third of the
period’s 156-chain sample reporting double-digit same-store sales
growth. Nearly two-thirds are reporting significant strength in income.
Income for the sample is a year-on-year +26% which compares with -27%
this time last year.

Company news this week, specifically Thursday’s run of monthly
sales announcements, will clear up whatever noise is in the sample. But
ahead of Thursday watch for data from drug-store giant Walgreens (7,720
stores – WAG), teenwear chain Hot Topic (837 stores – HOTT) and on
Wednesday from furniture-chain Haverty Furniture (HVT).

There is definitely strength appearing in home-goods. Same-stores
sales at hardwood-floor retailer Lumber Liquidators (195 stores – LL)
are up in the high single-digits and the chain has raised guidance.

Retail orders at furniture chain Ethan Allen Interiors (280 stores
– ETH) rose 18.6% in its March fiscal quarter in a gain the chain
attributes to rising consumer confidence. With backlogs building, Ethan
Allen is increasing both its retail and manufacturing capacity.

Sales are down at furniture & electronics chain Aaron’s (1,705 –
AAN) but it describes demand for household furnishings as strong in
contrast to the office furniture market which it describes as “very
difficult.”

Editor’s Note: MNI compiles its retail trade index based on a
weekly sample of company news and data.

** Market News International New York Newsroom: 212-669-6430 **

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