Retail Stocks Show Signs Of Recovery Despite Economy (WMT, XRT, M, KSS, TGT)

Now that Christmas is approaching, consumer spending should start to pick-up. However, the current situation with the economy can seriously affect how much the public will spend on the holidays.

Despite some companies posting higher then expected sales, the retail industry still desperately needs an increase in their sales. SPDR S&P retail (NYSE: XRT) has fallen from a high of over $45 in 2007 to below $20 in early 2009. Retail stocks have been gaining ground since then, as the SPDR S&P Retail trades at an average of $30 in 2009 and the S&P Retail index increasing 45% over the year.

This rise points to recovery in the sector. Analysts now estimate that 122 retail companies will be increasing outlook by 2.1%. Macy’s (NYSE: M) , one of the largest mall chains in the US, has raised its full year profit and sales outlook for this year as their third quarter losses narrowed down behind the move to localize merchandize in their department stores. Industry giant, Wal-Mart, also announced an increased in their full year outlook but still predicts that their fourth quarter may not reach analyst estimates. Although the economy is showing signs of turning for the better, concerns on unemployment is still weighing down on consumer spending. Hence Wal-Mart has said that they will trim down inventories while investing to keep their prices competitive while paying more on advertisements.

Other companies are also reporting increases in earnings as the situation in the economy gets better. Urban Outfitters (NASDAQ: URBN) reported an increase in third quarter earnings of 5.22% as they reported earnings of $62.4 million compared to $59.3 million the same quarter a year ago.

Kohl’s (NYSE: KSS) Corporation announced third quarter earnings of $1.93 million, an increase compared to last year’s earnings of $160 million. Kohl’s Corporation also announced earnings outlook within the range of $1.14 a share to $1.24 a share. Share for Kohl’s traded flat at around $54.60 after surging to $55.30 in early morning trading.

Target Corporation (NYSE: TGT) and Costco Wholesale Corporation (NASDAQ: COST) is projected to continue its earnings growth, with projected earnings growth of 13.73% and 12.78% respectively. Target Corporation fell 1.88% to $49.22 while Costco is trading flat at $60.42 a share.