Shop Talk

Check out Bernstein Research talking about signs of a bottom for retail stocks.

In a research note, Bernstein says that as the broader market recovered a strong 8.5 percent in March, retailers logged another month of robust performance, with a 15.9 percent return for the month.

A critical factor in this apparent stabilization of consumer demand is the savings rate, according to Bernstein. 

“A steadily increasing savings rate applied severe pressure to discretionary spending in late 2008 and early 2009, and a rising savings rate is the most significant risk to the consumer outlook,” the note states.

In a bright sign for retailers (but maybe not a bright sign for savings accounts) Bernstein says the sequential decrease in the savings rate in February to 4.7 percent from 5.1 percent in January supported better retail fundamentals and broke the savings momentum since last October.

“We believe that  consumers—after four to five months of self-inflicted austerity—relaxed their grip on their wallets modestly and treated themselves to a few small luxuries given early signs that Armageddon might be  averted; in other words, denial is difficult to sustain.”

Given there are now emerging signs of economic stabilization, Bernstein says the window for buying retail stocks en masse seems to be closing.

Also in the basket:

U.S. economy sheds 663,000 jobs

Family Dollar still a good recession play?

Dressing Michelle: Major Designers Wait for First Lady’s Call (WWD, subscription required)

Six Lessons Wall Street Could Learn From Retailers (STORES magazine)
 

(Photo: Reuters)