Retail Sales Surprise, Economic Findings Are Bullish for This Membership Holding

Coming off recent comments from JPMorgan Chase JPM and Bank of America BAC about consumer spending being more resilient than expected, the March Retail Sales report came in ahead of market expectations.

By the numbers, retail and food services sales rose 4.6% year over year, accelerating from February’s 3.5% print to hit the quickest growth rate since December 2023. Focusing on pure retail-only sales, those too jumped 4.6% compared to year-ago levels, led by auto and other motor vehicles sales up 9.2% year over year, furniture (up 7.7%), clothing (up 5.4%), and electronics and appliances (up 1.8%). Other categories, including non-store retailers (up 4.8%) and grocery stores (up 3.7%) were up nicely year over year, but not as much as their overall March quarter figures.

While there may be some thinking this speaks solely to the strength of the consumer, seeing the sharp increase in categories like autos, furniture, clothing and electronics compared to January and February figures and what was expected on the Trump tariff front strongly suggests a pull forward in consumer buying activity. Reading between the lines, we see it as further evidence of consumers spending purposefully, but we won’t know exactly how much was pulled forward until we get two pieces of future data. One will be the April Retail Sales report, and the other will be quarterly results and guidance from retailers and other retail-facing companies.

What we can surmise from the March data is that, based on its U.S.-adjusted March comp sales of 8.7%, Costco COST clearly took consumer wallet share during the month. While Costco doesn’t provide a geographic breakdown of its e-commerce sales, approximating that figure based on about 70% of its warehouses located in the U.S. against its 17.5% March e-commerce comp sales figure, kicks out a number that is well ahead of the 4.8% March increase for non-store retailers cited above.

Continuing with non-store retailers, March quarter retail sales by that category rose 5.6% year over year, nicely ahead of the 4.1% figure for pure retail. This confirms our view that consumers will lean into digital shopping to stretch their disposable spending dollars. It’s also a positive for our position in Amazon AMZN shares.

In the past, we’ve discussed that, for all the line items found in the monthly retail sales report, it is lacking several spending categories, such as travel, services and a few others.

For travel, Bank of America shared it saw a 3% increase in travel-related spending volume during the March quarter. On Tuesday night, United Airlines UAL reported better-than-consensus March quarter results as international travel continued to outshine domestic travel. In what we can only describe as an interesting move, unlike Delta Air Lines DAL, which recently withdrew its 2025 guidance, United offered two sets of guidance: one for a “stable environment” and one for a “recessionary environment.” What stood out to us were the comments from CEO Scott Kirby that bookings have stabilized for the remainder of the year, and that while travel from Canada to the U.S. is down 5%, all-over international travel remains up. Based on what we saw flying back from London to the U.S. on Monday, we can attest to no apparent slowdown thus far.

Taking stock of the findings outlined above, we are optimistic about quarterly results o Thursday morning from American Express AXP. Consensus expectations call for March quarter EPS of $3.47 on revenue of $16.93 billion and June quarter guidance of EPS of $3.89 on revenue of $17.7 billion. As we parse the Amex results and comments, we would expect to see the power of its membership business model, which includes roughly 65% of its 2024 pre-tax income derived from card membership revenue, shine through. As we digest the results and guidance, we’ll revisit our AXP price target as needed.

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At the time of publication, TheStreet Pro Portfolio was long BAC, COST, AMZN and AXP.