After three consecutive months of declines, retail sales bounced back into positive territory in April according to data released by the Australian Bureau of Statistics yesterday.
Not only were retail sales in positive territory, but an increase of 1% month-on-month was well ahead of expectations. Economists had been expecting sales to lift 0.3% in April according to Bloomberg.
Here were the retail winners in April:
Domino's Pizza Enterprises Ltd (ASX: DMP), Collins Foods Ltd (ASX: CKF), and Retail Food Group Limited (ASX: RFG) are likely to have had a good month. Sales in cafés, restaurants, and take away food services rose 1.1% during the month.
Food sales rose by an even stronger 1.2% in April, no doubt much to the delight of Wesfarmers Ltd (ASX: WES) and Woolworths Limited (ASX: WOW).
But arguably the biggest winner in retail in April was Myer Holdings Ltd (ASX: MYR) thanks to a 2.5% increase in department store sales.
Though it is worth pointing out that Myer has already revealed its own sales for the 13 weeks to April 29. Sales fell 3.3% on the prior corresponding period, but would almost certainly have been far worse had it not been for April's rebound.
Shareholders will be hopeful that the strong sales trend continued into May.
Is the retail gloom over?
It's going to take another month of strong retail sales to convince me that the tide is turning.
After all, there is a danger that April's data is a touch misleading due to the impact that Cyclone Debbie had on retail sales in March.
Not only did the cyclone cause a notable dip in sales in Queensland and northern New South Wales, but the disruptions it had on the supply chain led to higher prices for certain food products.
Foolish takeaway
While the data is promising, I believe it is too soon to get excited over it. I feel investors might be better off focusing on other areas of the market for the time being.
