All the Consumer-Spending Clues Are Lining Up

If it were just one or two major retailers putting up some surprisingly-strong numbers, it would mean little. When the vast majority of them do – as they have for a few months now – the case against consumerism’s revival is increasingly tough to make. Did February’s retail sales results seal the deal for the end of the recession and the beginning of the recovery? It sure looks that way.

By the numbers: Last month, retail sales were up 4% from the prior February’s total. Granted, one month of better results does not make a trend, but six straight months of improved retail sales can’t exactly be called a fluke either.

The counter-argument is rooted in a simple reality check…. the prior six months are being compared to the period between September of 2008 to February of 2009, which were economic and market disasters by anybody’s standards. We should be doing better than then, and quite easily.

And, that argument holds water. That’s not quite the point though. Stocks rise or fall based on comparative changes over time, and the consumer is clearly getting healthier as times moves on. Indeed, on a year over year basis, personal savings is starting to fall, as personal consumption turns positive again. In fact, consumers had access to more credit in February than they did in January… the first time in over year we’ve seen monthly credit levels move higher.

Picks of the litter: Where are shoppers shopping the most? The numbers suggest the ‘wants’ are chipping away at the ‘needs’ and value-oriented venues.

For instance, teen retailer Abercrombie & Fitch (ANF) saw a same-store sales increase of 5% in February, versus an expected dip of nearly 7.0%. Zumiez (ZUMZ) generated a same-store revenue increase of 11.2%, easily topping analyst forecasts.

It wasn’t just fickle teen spenders that dug deeper into their pockets though. J.C. Penney (JCP) mustered a 1.2% increase in same-store sales last month… the first in over two years. Macy’s (M) wowed the market with a 3.7% improvement in February’s top line.  Nordstrom (JWN) posted a 10.3%  pop in same-store sales.

Looking ahead: If it were just these select retailers with better February numbers, one could still argue against the ‘trend’. It’s not just these though – most retailers are putting up monthly increases now, with some of them being huge. And, analysts are finally starting to see the light.

Gap Inc. (GPS), as an example, is now expected to earn $1.77 per share in 2010; the number was $1.66 just a month ago. As estimates for other stores continue to rise, so too will the perceived value of those stocks… pushing their prices higher in the process.

That, plus the expected 2.6% increase in same-store sales predicted for the current month, points in a bullish direction.