Retail sales showed some vibrancy in March led by solid gains from building material and garden equipment sellers (HD, LOW) and general merchandise chains (COST, WMT, CASY, TGT). A revision to February's retail sales mark also bodes well for the retail sector.
Sales at electronics and appliciane stores (BBY, CONN, HGG) moved in the wrong direction during the month, falling 1.6% M/M and 0.7% Y/Y.
Though retailers had a hard time driving store traffic in Q4, a couple of under-the-radar store chains delivered stunning comparable-store sales growth.
Conn's (CONN -0.3%) paced the sector with a 33% comp, while Restoration Hardware (RH +10.8%) saw a 24% gain.
Analysts have praised management at both firms. They note Conn's ratcheted up its risk a bit with its in-house financing options, but the boost in store traffic is hard to argue with. Execs at Restoration Hardware are lauded for having shown a deft hand at responding to the topsy-turvy retail atmosphere.
Shares of both companies are up at over a double-digit percentage for the week.
Conn's (CONN +12%) lifts its forecast for full-year EPS to $2.75-$2.80 from $2.50-$2.56. Same-store sales at Conn's are expected to rise 22% to 25% for the fiscal year ending January 31, 2014.
Best Buy (BBY -0.1%), on the other hand, has cut costs and focused its message to consumers on service and expertise. The company has stuck with electronics and mobile, but refined its selling channels.
Sector watch: Though Best Buy has done a fine job with its turnaround in 2013, the soaring margins and momentum at Conn's from furniture and mattress sales are hard to ignore. The retail chain also derives a good chunk of its business by offering customers favorable credit terms, a temptation that Best Buy has resisted in the past due to the risk it brings into the equation.