Retail Reality Check – Comparing March to What Number?

On the surface, the retail sales numbers unveiled last week looked at least promising for all merchants, and downright amazing for a few of these names. Take Saks Inc. (NYSE:SKS) and Nordstrom Inc. (NYSE:JWN), for instance. Saks saw a 12.7% increase in same-store sales last month, while Nordstrom fostered a 16.8% improvement in its March same-store sale figure.

Those are huge numbers, even if the retail tide was helping by flowing in the right direction…. March’s total same-store retail sales were up a solid 9.1%.

There’s more to the story, however.

Compared to what?: A quick glance at the numbers suggests the consumer is finally back, and in good form. Think about the sales figures we’re comparing this March’s results to though – March of 2009’s totals. That was a point in time when the market was at its worst, and when shoppers were least likely to be motivated.

Remember, even in late March of 2009 - after the market had rallied for a couple of weeks – nobody really expected it to be the beginning of a long-term recovery.

As evidence to the idea, same-store sales at Saks back in March of 2009 fell a nasty 23.6%. So, the 12.7% bump last month is a tad unimpressive in the grand scheme of things. The same goes American Eagle Outfitters (NYSE:AEO), which saw a 15% in March’s top line, yet still failed to offset the 16% same-store sales dip from March of the prior year.

Don’t get whiplash: In the same sense investors may want to hold off on their enthusiasm regarding March’s retail numbers, jumping to negative conclusions is also a mistake – not all retailers were facing excessively easy comparisons.

Take discounter Fred’s (NASDAQ:FRED) as an example. The company was panned a bit for its tepid 3.6% sales improvement in March, but most commentators failed to note it was one of the few merchants that actually saw same-store revenue increases in March – as well as the entire first quarter – of 2009. As such, it’s one of only handful of retailers doing better than they wee at this point in 2008.

Another equally important footnote should be added for Aeropostale (NYSWE:ARO). Last month’s 19% increase in same-store sales might lead one to believe it’s just another case of a tepid comparison figure being easily topped. That’s not the case though. Aeropostale sales were actually up a respectable 3.0% in March of last year.

In other words, the trendy ‘tween’ retailer is just that in tune with how to draw dollars out of shopper’s hands… a hint of strong, in-touch management. Better still, the ARO price of profit score is a mere 13.4, making this stock cheap as well.

The moral of the story…: There’s always more to the story. Look at the bigger picture when considering retail sales trends.