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… Too Good to Be True

JOHANNESBURG, SOUTH AFRICA–(Marketwire – April 20, 2010) – www.rothmanresearch.com — One can tell when spring is here, as snow starts to melt and sprouts start forcing their way out. It would seem that parallel to the season, economic recovery in the U.S. is taking the same analogy. These last two years have seen the worst economic blizzard since the end of the last world war, but since the last few weeks, here and there proof of an economic recovery is sprouting, increasing consumer confidence in the overall market which relates to an increase in spending. For retailers, consumer spending is the golden bell to wake up to and what has been quite extraordinary regarding the recent increase in consumer spending is that it is defying the norm, growing in a climate of elevated unemployment. “It looks like the people have had enough of staying quartered in their homes… they want to go out and they want to shop, even if it is frugal spending at this point. It is clear that the past month has seen an increase in mall traffic which has benefitted many retailers, one of which has been Chico’s FAS Inc. (NYSE: CHS),” stated Jack Benassi of www.rothmanresearch.com. 

*Complimentary downloadable research on Chico’s FAS Inc. is accessible upon registration at http://www.rothmanresearch.com/article/ltd/23448/Apr-20-2010.html

Since the earnings season started, we are also seeing improved financial reports from different sectors which a year ago would have been a feat, and positive economic data is starting to build up momentum. For instance, the last Industrial Production Update in the U.S. had some positive trends which indicated that overall production is getting back on track with a year-over-year growth of 4% in March. Release of this report had a prevalent optimistic effect on the market which firstly ignored the unforeseen surge in weekly jobless claims, and focused on some positive corrections on retail stocks last Thursday. “We have seen some positive actions in some of the retail stocks, like Limited Brands Inc. (NYSE: LTD), these past weeks even with unemployment at a very uncomfortable level. This is mainly due to the growing consumer spending. Limited Brands, as an example, had great fourth-quarter 2009 readings which can be attributed to the company’s constant efforts in managing cost and inventory. With consumers gradually shifting their ‘wait-and-see’ attitude to ‘shopping mode,’ we have seen Limited Brands comparable-store sales produce consistent growth in the first months of 2010 after a 2% drop in December 2009. With its earnings announcement due for mid-May, we are expecting positive results for the companies first quarter 2010, even if they are in low single digit,” commented Jack Benassi of www.rothmanresearch.com. 

*Direct & free downloadable report on Limited Brands Inc. is available by signing up now at http://www.rothmanresearch.com/article/ltd/23447/Apr-20-2010.html 

This string of positive news and recoup in consumer spending does seem to have a hollow feeling, however, as the truth remains that the U.S. still has a lot of unemployed people out there.

*www.rothmanresearch.com is a source for investors seeking free information on the apparel stores industry; investors are encouraged to sign up for free at http://www.rothmanresearch.com/index.php?id=6&name=Register.

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Tags: Good, Good News