Reports of Retail's Death Are Greatly Exaggerated
NEW YORK (TheStreet) -- October retail sales came in much stronger than expected, with a 4.2% unadjusted increase from 2012, according to the National Retail Federaton. That comes after strong earnings reports from retail giants including Wal-Mart
With the sector robust for 2013, investors should expect a continuing healthy stock performance for the retail industry leaders.
In more bullish news for the retail sector, the September report was revised upward by the U.S. Census Bureau from a drop of 0.1% to no decline. Contributing to the recent good news for stores across the nation are lower gas prices, higher home sales and a stock market setting new records. Those factors and more engender a more bullish economic outlook, which leads to greater spending. Overall, retail sales for October were $428.1 billion, up 3.9% from October 2012.
As the nation's largest retailer, Wal-Mart is an obvious indicator of the sector.
In a bullish reversal, Wal-Mart's recent earnings beat the estimates of Wall Street by 1 cent after falling short the previous two quarters. For the fiscal third quarter, Wal-Mart posted net income of $3.7 billion, which was a 2.8% gain from a year ago. Earnings per share were $1.14, up 6.5%. Total revenue for Wal-Mart was $115.7 billion, up 1.7% from the same period in 2012.
Walgreen, the biggest drugstore chain in the country, reported earnings that were up 86% from last year. Revenue were a record $72.2 billion. Adjusted earnings were a record $72.2 billion: at 73 cents a share, this result beat the analyst community prediction of 72 cents. Quarterly sales rose by 5% for Walgreen to $17.9 billion.
America's largest electronics chain, Best Buy reported net earnings of $54 billion. That was a reversal from a net $10 million loss from 2012. Making it even more bullish was that it beat what analysts were expecting.