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The Zacks Analyst Blog Highlights: Exxon, Amazon.com, CarMax, AutoZone and Ethan Allen

April 14, 2011 | Comments : 0 Recommended this article: (0)

XOM AMZN KMX AZO ETH

For Immediate Release

Chicago, IL – April 14, 2011 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Exxon (XOM), Amazon.com (AMZN), CarMax (KMX), AutoZone (AZO) and Ethan Allen (ETH).

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Here are highlights from Wednesday’s Analyst Blog:

Retail Sales Up (& Not Just At the Pump)

Retail Sales were slightly below expectations for March. Total retail sales rose 0.4%, and are up 7.1% from a year ago. The consensus of forecasters was looking for a rise of 0.5%. However,February was revised up from 1.0% growth to 1.1% growth, which more or less offsets the miss.

The Retail Sales report covers far more than just the shopping malls; it is a very broad-based measure of consumer spending. Since consumer spending makes up 71% of the economy it is a very important number. That overstates things a bit since retail sales are mostly about the sale of goods, not services -- and services make up two thirds of what consumers spend -- but still, it is a pretty important thing to watch.

Auto Sales Drag

Auto sales were a bit of a drag on overall retail sales in March, falling 2.3% on the month, after rising 1.0% in January (revised down significantly from 2.3%). On a year-over-year basis they were up a solid 10.0%. Excluding autos, retail sales rose 0.8%, down from the February rise of 1.1%, but down only after a big upward revision from 0.7%. The rise was also slightly higher than the 0.7% gain expected, but combined with the upward revision, it amounts to a major positive surprise.

Year over year sales are up 6.5%. The year over year numbers are pretty robust, but keep in mind that these numbers are not adjusted for price changes, so part of the year-over-year gains simply reflect inflation.

Growth Widespread, but Uneven

The growth was uneven, but generally widespread. The report tracks 13 major categories of stores, of which ten were up and only three down on the month. Year over year, all types of store are showing increases, ranging from 2.5% (General Merchandise stores) to 16.7% for Gas Stations. Clearly, gas prices were the major factor in the increased sales at the corner Exxon (XOM) station, not a sudden rise in the number of 44oz. fountain drinks being consumed. Actually, the evidence suggests that the volume of gasoline sold is actually declining in response to higher prices.

Aside from the Gas Stations, which are clearly a special case, the next strongest group on a year-over-year basis was the Non-Store Retailers -- the group that includes catalog and Internet retailers like Amazon.com (AMZN). They are up 12.4% year over year. However, it looks like they are cooling off, actually down 0.3% on the month, reversing a 0.3% gain last month.

As noted above, the Auto stores were up 10.0% year over year, the third and last group to be up double digits year over year. That group includes not only the auto dealers like CarMax (KMX) but also the parts stores like AutoZone (AZO).

The monthly decline of 1.7% did not make the group the weakest, however. That dubious distinction goes to the Miscellaneous stores, where sales were down 2.1% on the month. Although that was on the heels of a very strong 3.1% rise last month, and year-over-year sales are up a solid 7.3%.

The best performers on the month were not the Gas Stations, but the Furniture Stores, where sales rose 3.6% for the month, after a 1.3% rise last month. This is a major turnaround for the likes of Ethan Allen (ETH). Even with the robust gains of the last two months, year over year sales are only up 2.7%.

I see this as a very encouraging sign. There are few purchases that are more easily postponed than getting a new dining room table. The recent pickup at the Furniture Stores is a sign of increased consumer confidence, and probably a more reliable one than the consumer confidence and sentiment surveys.

The tale of the Electronics and Appliance Stores tells a similar tale, up 2.1% for the month, on top of a 1.5% rise in February, but only up 2.9% year over year. Normally, both Furniture and Appliance sales are closely tied to existing home sales, but those have been weak of late, which makes the recent pop in sales there even more impressive.

The strength in the electronics side also has to do with the latest electronic gadgets, which tend to be unrelated to home sales. However, getting a new flat screen TV is also an easily deferrable purchase. It is worth noting here that prices for electronics tend to fall over time, so this is one area where the gains are not simply a reflection of inflation.

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