U.S. retail sales jumped in March, the Commerce Department reported on Apr 15, with people spending more freely as the second round of stimulus checks reached millions. This is also the first time that retail sales have increased this year.
The retail sector was left battered and bruised last year after shops had to be closed down for weeks following the COVID-19 outbreak. Things started looking up but the fourth quarter once again saw the retail sector struggling as disposable cash dried up once the stimulus checks got exhausted. Then, inclement weather in February 2021 once again played spoilsport.
Retail Sales Jump in March
The Commerce Department reported on Thursday that retail sales jumped 9.8% month over month in March, after unexpectedly declining in February. This is also the best monthly jump since May 2020, when the first round of stimulus checks started reaching people.
Retail sales had jumped a whopping 18.3% in May 2020. This time too the reason behind the jump wasn’t any different. As the second round of stimulus checks started reaching people, they spent more freely.
Moreover, on a year-over-year basis, retail sales grew 28%. This huge gap was primarily because businesses last year during this time had come to a standstill following the coronavirus-induced lockdown.
Sales Driven by All-round Spending
March’s gains were led by higher spending on sporting goods, clothing, and food and beverage. Sales at restaurants and bars grew 13.4% as restrictions got relaxed and people felt more confident following the rollout of the vaccines. Spending on sporting goods soared 23.5%, apparel and accessories sales gained 18.3%.
Besides, sales at cars and motor vehicle parts dealers grew 15.1% although automakers went for production cuts due to the global semiconductor shortage. Also, gas station receipts jumped 10.9%, indicating that more people traveled.
According to a
CNBC report, a recent report from the New York Federal Reserve shows that people are more cautious about spending this time around after receiving the stimulus checks. Last time, the checks got exhausted in the fourth quarter that saw retail sales taking a hit once again.
The report shows that recipients of the stimulus plan to save 41.6% of their total amount and spend 24.7%. Last time, consumers saved 34.5% and spent 29.2%, which indicates that they are spending freely but wisely.
The rise in retail sales comes after consumer confidence raced to a one-year high in March. The consumer confidence index jumped to a reading of 109.7 as stimulus checks started reaching people and the vaccination drive gained pace. Economists believe that the pace of shopping will pick up as the year progresses and more people get vaccinated.
New cases of COVID-19 have somewhat been on the decline and three vaccines are already in the market. This along with the new round of stimulus checks is giving people more confidence to spend. This is thus the right opportunity to invest in retail stocks as the economy too has started to bounce back.
L Brands, Inc. ( LB Quick Quote LB - Free Report) evolved from an apparel-based specialty retailer to a segment leader focused on women’s intimate and other apparel, personal care, beauty and home fragrance products.
The company’s expected earnings growth rate for next year is 41.3%. The Zacks Consensus Estimate for current-year earnings has improved 43% over the past 60 days. L Brands sports a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here. Levi Strauss & Co. ( LEVI Quick Quote LEVI - Free Report) designs and markets jeans, casual wear and related accessories for men, women and children under the Levi's, Dockers, Signature by Levi Strauss & Co. and Denizen brands.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 5.2% over the past 60 days. Levi Strauss sports a Zacks Rank #1.
Citi Trends, Inc. ( CTRN Quick Quote CTRN - Free Report) is a value-priced retailer of urban fashion apparel and accessories for the entire family.
The company’s expected earnings growth rate for the current year is 26.1%. The Zacks Consensus Estimate for current-year earnings has improved 28.8% over the past 60 days. Citi Trends sports a Zacks Rank #1.
Conns, Inc. ( CONN Quick Quote CONN - Free Report) sells major home appliances, including refrigerators, freezers, washers, dryers and ranges, and a variety of consumer electronics, including projection, plasma and LCD televisions, camcorders, VCRs, DVD players and home theater products.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 25.4% over the past 60 days. The company sports a Zacks Rank #1.
WilliamsSonoma, Inc. ( WSM Quick Quote WSM - Free Report) is a multi-channel specialty retailer of premium quality home products. Incorporated in 1973, the company has five brands that are its operating segments.
The company’s expected earnings growth rate for the current year is 4.4%. The Zacks Consensus Estimate for current-year earnings has improved 22.8% over the past 60 days
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