Rob Black's Retail Market Roundup For May 1 (AMZN, CBOU, MW, PEET, SBUX, WMT)

Though average tax refunds are on the rise and more consumers receive them faster due to electronic tax filing, we believe this will have a relatively small impact on retailers’ sales in the month. Based on IRS data through April 8, average refunds for U.S. taxpayers have increased 4.6% to $2,290 vs. $2,189; average refunds paid through direct deposit increased 2.1% to $2,651 vs. $2,570 last year. However, a study conducted by Principal Financial and Harris Interactive showed that more consumers are planning to save their refunds rather than spend them.

JP Morgan downgraded Men's Wearhouse (MW) to Neutral.

Wal Mart Stores Inc. (WMT) said its April sales in the U.S. rose about 6.8%, up from previous company guidance of 4-6%, over the same period last year because of Easter falling later in the calendar.

Amazon.com (AMZN) switched search partners from Google (GOOG) to Microsoft (MSFT). The company's Alexa search toolbar and A9 search engine now get results from MSN Live instead of GOOG. Bloggers speculated that the move was a reaction to GOOG's growing encroachment on the company's turf. GOOG recently launched a program allowing publishers to sell online access to texts through its book search site.

Thomas Weisel previews Starbucks (SBUX), Peet’s Coffee (PEET) and Caribou Coffee’s (CBOU) earnings. They note that while the Starbucks consumer has proven to be very sticky during 3rd quarter 2005’s spike in gasoline, they are hesitant to use it as a proxy for secular demand. On the cost front, lower dairy and coffee cost have the potential to aid all three companies. Firm expects SBUX to have the greatest potential for upside in the quarter given previously released better than expected same-store sales.

Thomas Weisel is most interested in the pace, and execution, of Peet’s rejuvenated retail store growth and its impact on margins; accordingly, they are $0.06 below consensus for 2006. Firm thinks Caribou Coffee's 1st quarter Same Store Sales significantly lagged SBUX and most restaurants. Given rising gas prices and the brand's Midwest prominence, they do not see a near term catalyst for a reversal.

With barely one movie under its belt, Starbucks is moving aggressively toward expanding its involvement in the entertainment business, seeking movies and books to promote. The retail coffee giant — which used its 6 million customers a day to promote "Akeelah and the Bee," a Lionsgate Entertainment (LGF) movie that opened this weekend —has signed an agreement with the William Morris Agency to find more movie and book projects to market. The aim is to have one book in Starbucks stores this year, and at least two or three movies to promote and sell on DVD next year, with more projects in years to come.

Starbucks had its biggest success with a Ray Charles album in 2004, "Genius Loves Company," which sold 775,000 copies and went on to win eight Grammys. Starbucks sold 3.5 million CD's in the 2005 fiscal year. Hollywood can only hope for this kind of success as consumer habits are changing to Internet, cellphone and iPod entertainment.