Retailers have revealed improved holiday sales and better guidance, suggesting that the expanding economy and lower oil prices are making a difference for retail sector exchange traded funds.
The SPDR S&P Retail ETF (NYSEArca: XRT) increased 13.7% over the past three months and rose 11.0% over the past year.
A number of retailers are showing better-than-expected November-through-December holiday sales, with five companies raising their guidance, reports Bob Pisani for CNBC. [Consumer, Retail ETFs Enjoy High Yuletide Spirits]
Specifically, American Eagle (NYSE: AEO), Aeropostale (NYSE: ARO), State Stores (NYSE: SSI), Cato (NYSE: CATO) and Zumiez (NYSE: ZUMZ) raised their guidance.
Moreover, others also reported higher-than-anticipated sales, including Barnes & Noble (NYSE: BKS) and Urban Outfitters (NYSE: URBN).
Most of these smaller-sized companies are held in equal-weight ETF strategies, like XRT, alternative index funds and small-cap consumer. For instance, XRT includes a 1.0% tilt toward AEO, ARO, SSI, CATO, ZUMZ, BKS and URBN.
Additionally, the PowerShares Dynamic Retail Portfolio (NYSEArca: PMR) has a 2.9% position in ZMZ and 2.8% in CATO. The PowerShares S&P SmallCap Consumer Discretionary Portfolio (NYSEArca: PSCD) includes ARO 0.2%, ZUMZ 0.9%, CATO 1.1% and BKS 1.0%.
Analysts believe that the better-than-expected sales are a sign that the lower gasoline prices, improving job market and stronger economy are pushing consumers to spend more, which could continue into 2015.