Second quarter sales and earnings from retailers are indicating that consumers are spending again. Various U.S. retailers have kicked off earnings season on a positive note, gaining investor interest to the sector and exchange traded funds.
“Same-store sales at the more than 20 companies tracked by Retail Metrics Inc. rose 0.3 %, compared with the 1% average estimate of analysts surveyed by the research firm. The results follow a 7.2% increase last year,” Kelly Blessing for Bloomberg wrote.
TJX Cos (NYSE: TJX), which owns discount stores T.J. Maxx and Marshalls, beat analysts’ average estimate for a 3.7% sales increase. The healthy earnings for discount retailers signals that middle income consumers are spending again. Earnings season has kicked off on a mixed note, with overall sentiment more positive than expected. [S&P 500 ETFs Forming Bullish Pattern]
“The high-end consumer has fared particularly well throughout this recovery,” Ken Perkins, president of Retail Metrics, said in an interview. “On the low end, a lot of middle-income consumers have traded down.” [ETFs for Lower Oil Prices]
The retail sector is cyclical by nature. If the U.S. economy continues to make baby steps in an upward direction, the sector will benefit. The SPDR S&P Retail ETF (NYSEArca: XRT) has been on a steady uptrend since bottoming out in August 2011. XRT was down 0.13% so far this week, while the SPDR S&P 500 (NYSEArca: SPY) was down 0.16%. [Why Retail ETFs Need to Get Back on Track]