For Immediate Release

Chicago, IL – October 15, 2009 – releases the latest Zacks Industry Rank. Stocks featured in this week’s analysis include Limited Brands (LTD), Kohl’s (KSS), Target (TGT), Ross Stores (ROST) and TJX Companies (TJX).

Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for

This week: Retailers’ Registers Are Ringing

Consumers are showing a willingness to spend, even as they watch their budgets.

On Wednesday, the Commerce Department said that retailers saw sales rose 0.5% last month, excluding motor vehicles and parts. Furniture & home furnishing stores, health & personal care stores, general merchandise stores and gasoline stations all saw increases of 0.8% or better.

(The hangover from the Cash for Clunkers program resulted in an 11.8% drop in sales at auto dealers. This skewed the overall change in retail sales down to -1.5%.)

The increase may seem surprising given the economic backdrop. After all, unemployment is rising towards 10% and another wave of foreclosures could be forthcoming as adjustable rate mortgages reset. On the other hand, the majority of Americans are employed and the improving economic data is probably giving consumers some confidence, even if the sentiment surveys are less clear.

Plus, the Commerce Department’s data is backed up by rising sales at several retailers. For instance, Limited Brands (LTD), Kohl’s (KSS) and Target (TGT) saw an improvement last month.

Of course, some of the biggest increases continue to occur at the discount retail chains. Ross Stores (ROST) and TJX Companies (TJX) both said September same-store sales jumped by 7% or more.

Sales Benefiting From Several Factors

There was no single key driver to explain the improvement in sales. Traffic was better and Target noted that the average transaction continues to improve. Executives at a warehouse a large warehouse chain observed that though coupon use has increased, consumers are still spending essentially the same amount of the register.

Unseasonably cool weather may have also played a role. TJX saw increased demand for fall apparel. The good weather across much of the country may have also given people reason to go out and shop. Not to mention that the calm hurricane season probably helped stores in the Southeast.

Again, the economy is also playing a role. With business conditions stabilizing, consumers are more willing to open their wallets. Though spending patterns will remain comparatively depressed well into 2010, and probably longer, even relatively small increases can make a difference in the data.

Retail Remains A Top Sector

Despite rising unemployment, Retail has been among the top-ranked sectors for many months. Several retailers have been able to top analyst expectations, resulting in positive earnings estimate revisions.

Last week, several companies raised their third-quarter guidance, including KSS, ROST, TJX and TGT. Though LTD did not provide any guidance, 10 out of the 15 covering analysts raised their third-quarter projections. The full year Zacks Consensus Estimate has recently been raised on all 5 companies.

There is no doubt that retailers still face challenging conditions. The National Retail Federation expects holiday shoppers to spend 1% less this year than last year. However, as long as retailers continue to perform better than expectations, their stocks should continue to rise.

Zacks Rank and Industry Classification

ROST, TGT and TJX are Zacks #1 Rank (“strong buy”) stocks and are classified in Retail-Discount.

LTD is a Zacks #1 Rank stock classified in Retail/Apparel-Shoe. KSS is a Zacks #1 Rank stock classified in Retail-Regional Department Stores.

Zacks “Profit from the Pros ” e-mail newsletter offers continuous coverage of the industries and the stocks poised to outperform the market. Subscribe to this free newsletter today by visiting

About Zacks is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3:1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it’s your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit From the Pros by going to

Follow us on Twitter:

Join us on Facebook:

Visit for information about the performance numbers displayed in this press release.

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact: Charles Rotblut, CFA
Phone: 312-265-9352


Zacks Investment Research