More and more sectors are lending evidence to support the call by Fed Chief Ben Bernanke and others of an economic recovery for the last half or 2009. On Thursday (June 25), it was the retail sector’s chance to shine. Despite a surprisingly lower jobless claims report, positive earnings reports and optimism from retailers helped drive stocks higher by two per cent, ending a four-day slide in equities.

Home furnishings company Bed, Bath and Beyond kicked things off early in the morning by declaring earnings growth of 14 per cent for its fiscal first quarter. Of course, one company’s loss is the other’s gain, as some of the credit for the company’s success can be attributed to the liquidation of competitor Linens N Things.

Shares of Bed, Bath and Beyond (BBBY) climbed 9.48 per cent during Thursday’s trade, boosting the stock $2.69 to a closing price of $31.08. Gains extended seven cents after hours, putting the stock less than $3 from its 52-week high of $34.00. The one year consensus target price for the stock is $29.91.

Other retailers benefited from the Bed, Bath and Beyond report. Another do-it-yourself home builder, Home Depot, saw its shares advance $.89 to close at $23.57. Soft good retailer J.C. Penney Co. climbed $1.60 to $28.20.

Earlier in June, leading automotive service retailer Pep Boys posted a nine per cent gain in its first quarter. The company also just approved payment of its regular 3 cent quarterly dividend, showing the Board’s faith in the company’s performance and future.

Leading fashion and apparel shoe and sports gear retailer Finish Line also reported its earnings Tuesday. Despite shrinking sales and earnings, the company said it was comfortable that performance was in line with expectations given the economic turmoil. The company’s CEO mentioned that Finish Line is dropping one of its struggling brands, Man Alive, in order to focus on other opportunities to diversify.

Many retailers have used the economy as a catalyst for either a change in direction or a motivation to consolidate product lines. Many retail analysts believe the retailers that make it through the recovery period still around are likely to benefit from having been forced to rediscover core products and divisions. The economy has caused many long-time retailers that were stuck in their ways to modernize operations and products.

Retail joins housing as sectors that appear ready to lead the charge through a recovery period that many economists are quick to say will be rocky. These sectors have been demonstrating the most consistent data the last couple months. Modest retail success now seems to validate consumer confidence reports that last two to three months that have shown significant jumps. Usually, stronger consumer confidence translates into more spending at some point.

Neil Kokemuller
11:15 PM EST
Thursday, June 25, 2009

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University. He is also in house stock market commentator at Live Charts UK, where you can find real time charts and share prices .

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