By Mark Pender

NEW YORK (MNI) – MNI’s U.S. retail trade index fell back nearly
seven points in the period ended May 8 to 54.1, which notwithstanding
last week’s run of mostly disappointing chain-store sales, is still well
above 50 to indicate meaningful year-on-year growth for the sector,
according to Market News International’s weekly survey released Monday.

Total sales in the sample are at a year-on-year +3.7% with
same-store sales at +1.7%, above the sample’s full-month April targets
of +3.0% for total sales and +1.5% for same-store sales.

The above-target results underscore the solid health of the retail
sector. Whatever April’s results are in Friday’s retail sales report,
results that will be clouded by calendar adjustments for Easter,
retailers are reporting accelerating trends.

Including adjustments, this sample points to a -1.0% headline for
total retail sales and -0.5% excluding motor vehicles. Excluding autos
and gasoline, the sample points to no change, a result that would
interrupt six straight gains for this category.

Many chains went out of their way last week to reaffirm the upward
guidance they issued a month earlier after March’s unusually strong
results. Income for the sample, boosted by minimal markdowns and lean
inventories, is a year-on-year +24% with nearly 60% of the period’s 196
chains reporting significant gains.

Gasoline may be April’s surprise as it may not add to the adjusted
comparison with March, despite a 2-1/2% rise in price and a 3% rise in
demand. The Commerce Department’s adjustment added to March but will
take a little bit from April despite the fact the month has one fewer
day.

Gasoline sales make up about 9% to 10% of total sales, a little
less than new autos which make up about 11%. Unit sales of new autos
were down about 5% from March but the dip in dollar terms will be
limited by relative strength in the higher-priced light truck component
and also by the possibility, based on anecdotal evidence, that April’s
incentives were less aggressive.

Indications for other motor-vehicle components are mixed. Auto-part
sales and boating sales have been weak but sales of used cars have been
strong. All together, motor vehicles may slip but probably not that much
to show respectable strength against March’s great surge in new car
sales.

Of all the company news last week, comments from Morton’s
Steakhouses (MRT) stand out as representative of the sample’s rising
strength. The chain of 76 restaurants ended a long string of deep
declines in its April fiscal quarter and now sees positive mid-single
digit comps ahead: “The slow but continuous improvement in business
travel, conventions and entertaining is having a positive impact on our
business.”

Editor’s Note: MNI compiles its retail trade index based on a
weekly sample of company news and data.

** Market News International New York Newsroom: 212-669-6430 **

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