Retailers Post Increase in March Sales, but Analysts Aren’t Celebrating Yet

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By Jonathan | April 9, 2010 5:53 AM EST

After a winter of uncertainty, analysts are celebrating the increase in retailers’ March sales. The Thomson Reuters’ Same-Store Sales Index rose 9.1% last month to the highest level in the index’s 10-year history.

Companies such as Kohl’s, Nordstrom, The Limited and Gap posted rising numbers, prompting some to say that its proof of an improving economy and increased consumer spending. However, some analysts are hesitant to laud the improved numbers.

Howard Davidowitz of Davidowitz & Associates commented that “there are some positives” in consumer spending, but he believes it’s a “sucker’s rally” in retail stocks and any rebound in consumer spending will be short lived.

“We’re in a bad place, heading for a worse place,” he says. The veteran analyst notes that huge retailers, such as Wal-Mart, were excluded.

“When you look at comp retail sales they don’t include the giants, they include some little dinky apparel chain doing a billion-five [in sales] and these analysts are dancing in the street.”

Furthermore, retailers fear that the jump in March sales will result in low April numbers. Additionally, the Retail SPDR was essentially flat at midday.

Davidowitz says the financial condition of the country is in “dramatically worse shape” than it was a year ago, with “no real jobs growth…deficits gone mad” and prospects for higher taxes for all Americans.

“There’s clearly pent up demand – there are needs [and] the consumer is jumping on those needs,” he says. “We’re in a cyclical economy. That doesn’t mean we’re better off. ”

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