The final projections from Retail Metrics are out and April is looking as though the same-store sales are going to come in up only 1.5%.  If so, this will mark the lowest gain since October 2010.  We have focused on the retail and apparel sector here to keep it focused and there are several issues that are expected to hurt this April.

For starters, an earlier Easter by 16 days pushed sales out of April into March.  Weak private sector employment data is not helping.  A very warm February and March likely acted as a pull-forward in sales away from April, and a later Mother’s Day most likely pushed some April sales out into May.  Another issue is the elevated but abating price of gasoline for consumers.  The gain of 8.7% in April 2011 is also making further gains more difficult by comparison.

The Monthly Retail Metrics economic diffusion index has rolled over and is now more negative data points than positive for the first time in months.  Here are some of the expected double-digit winners:

In large-format upscale apparel retail stores it is Nordstrom Inc. (NYSE: JWN) that is expected to have the highest marks with same-store sales gains of 6.2%.  Saks Inc. (NYSE: SKS) is expected to be up 5.6%

Lululemon Athletica Inc. (NASDAQ: LULU) may not be considered a ‘fashion’ retailer based upon its yoga and exercise theme, but the expectation is for gains of 21.8% for April same-store sales.

Michael Kors Holdings Ltd. (NYSE: KORS) sells through licensing but also has its own network of stores.  Retail Metrics sees it posting a massive 34.4% in same-store sales gains.

American Eagle Outfitters, Inc. (NYSE: AEO) is already seeing its shares urge by over 11% to $19.99 after it raised guidance based upon sales gains of 17% for stores open at least a year if you include the AEO Direct site.

Keep in mind that many retail outlets have seen two years or more of solid sales gains and that many of these stocks have risen excessively.  It might be getting easier to argue that the retail sector shares have risen enough that any bad news is not likely to be received too well by investors.

JON C. OGG

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