The 6 Positive Things about April’s Retail Sales Report

The advance retail sales (XRT) (XLY) report for April 2015 was on the whole, mixed. Of 13 reporting categories, six reported month-over-month gains. Sales fell in another six categories, while sales were unchanged in one subsector, miscellaneous store retailers. These categories experienced the greatest monthly increases:

• sporting goods, hobby, book and music stores – up 0.8% over March 2015 and 6.4% over April 2014
• health and personal care stores – up 0.8% over March 2015 and 5.3% over April 2014
• non-store retailers – up 0.8% over March 2015 and 6.3% over April 2014
• food services and drinking places – up 0.7% over March 2015 and 8.5% over April 2014
• building materials and garden equipment and supplies dealers – up 0.3% over March 2015 and 4.1% over April 2014
• clothing and clothing accessories – up 0.2% over March 2015 and 1.2% over April 2014

The mixed readings in the retail sales report brought about indifferent reactions from markets. ETFs tracking major stock indices such as the SPDR S&P 500 ETF Trust (SPY) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) were up only marginally on May 13.

Non-store retailing is the selling of goods and services outside the confines of a retail facility. It’s a generic term describing retailing that takes place outside of shops and stores—that is, off the premises of fixed retail locations and of markets stands.

Despite the gains posted by non-store retailers, e-commerce players Amazon (AMZN), ETSY (ETSY), and Netfix (NFLX) were down. AMZN was down on recent news that Walmart (WMT) is testing a new $50-a-year shipping service to compete with Amazon Prime, as mentioned in Part 1.

April was the third straight month that sporting goods, hobby, and book and music stores reported positive month-over-month sales. And, as mentioned in Part 1, market reaction was positive for sporting goods retailers Foot Locker (FL) and Dick’s Sporting Goods (DKS). This bodes well for quarterly results, not only for DKS and FL, but also for their suppliers, Nike (NKE), Under Armour (UA), and VF Corporation (VFC).

Stock prices of drugstore chains Rite Aid (RAD) and Diplomat Pharmacy (DPLO) rose by 2% and 1.7%, respectively, on May 13. Walgreens Boots Alliance (WBA) was down marginally. Nevertheless, WBA posted very strong results in its last quarter, and is up by 10.8% year-to-date.