New York, NY, May 18--A number of strong earnings reports from home improvement, office supplies and clothing retailers on Tuesday showed that higher oil prices are not hurting consumer spending as much as expected.
Retailers serving consumers across a broad spectrum of incomes were generally buoyant in the last quarter, with everything from large-scale home improvement to bulk discounters showing strength and boosting the Standard & Poor's 500 Retail Index 1.48 percent to 422.11.
Top U.S. home improvement chain Home Depot Inc. and Staples Inc., the leading U.S. office supply retailer, posted quarterly earnings on Tuesday that topped Wall Street estimates.
J.C. Penney Co. Inc., which has transformed itself from a dowdy, mid-priced retailer into a mainstream department store with fashionable merchandise, and close-out retailer Big Lots Inc. also reported earnings that were above analysts' average forecasts.
Nordstrom Inc. followed with better-than-expected quarterly earnings and boosted its profit outlook for the year, citing cost controls and strong sales of accessories and men's clothing.
"There is still a lot of momentum in the industry and some had written that off. Gas prices don't seem to be affecting consumers as much as we worried they might," said Ellen Tolley, spokesperson for the National Retail Federation.
Last week, Wal-Mart Stores Inc. reported a weaker-than-expected first-quarter profit and warned results for the current quarter would miss Wall Street forecasts.
Wal-Mart and other discounters, which target the most price-sensitive shoppers, have been more vulnerable to spending cuts as customers react to steep gasoline prices.
But a U.S. Commerce Department report last week showed that total retail sales jumped 1.4 percent in April, double Wall Street forecasts and their strongest showing in seven months.
This trend was reinforced by Tuesday's earnings announcements and optimistic forecasts from J.C. Penney, Big Lots, Nordstrom and Staples.
"The economy is chugging along here and it is not getting overheated. There's definitely demand out there," said John O'Donoghue, managing director of listed trading at CSFB.
