By and  on April 9, 2009

Retail stocks got a big bounce Thursday amid the broader market rally, even as March same-store sales showed major declines, most dramatically in the luxury sector.

But the sales decreases could have been a lot worse, and resulted in the cause-and-effect relationship between lower sales and declining share prices being turned inside out.

The S&P Retail Index jumped 14.41 points, or 4.6 percent, to 328.79, after rising 4.5 percent the previous day. The Dow Jones Industrial Average hit 8,000 and kept on going, ending the day at 8,083.38, up 246.27 points or 3.1 percent, following a strong profit preview from Wells Fargo & Co.

The same-store sales results represented a flight by consumers to value and away from conspicuous consumption as job losses during the recession reached a total of more than 5 million in March and the U.S. unemployment rate increased to 8.5 percent — the highest level in over 25 years — from 7.6 percent.

Although last month’s retail results were worse than the February figures, they were still better than anticipated. The late timing of Easter, which is Sunday, didn’t help the numbers, but it’s expected to benefit April. Building on that projection, investors went on a buying spree Thursday, betting retailers may be further along in their fight to regain sales momentum.

“The overall tone for March was actually stronger than the reported sales performance,” said Michael Niemira, chief economist and director of research at the International Council of Shopping Centers. “If we adjust for the calendar shifts, sales for March were stronger than reported.”

Matt Katz, managing director at AlixPartners LLC, a restructuring and advisory firm, pointed to discounters and off-pricers like The TJX Companies Inc. (up 2 percent) and Ross Stores Inc. (up 3 percent) and clubs like Costco Wholesale Corp. (4 percent) and BJ’s Wholesale Club Inc. (8 percent) to support the proposition that “if you have strong product at good value, you’re going to win the day. But there is definitely still a luxury consumer.”

However, he said, “Price point is in right now.” Katz acknowledged the “trade-up consumer is no longer there” and the upscale customer base is not what it had been.

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