You would think that Best Buy’s numbers yesterday and their commentary would have had a bigger impact on the analysis of today’s retail sales figures. Retail sales grew more than expected at 1%, but is a 1% gain worth celebrating? Initially, it appears that the market thinks so, and as you probably suspect, I think it is interesting but not overwhelmingly exciting. August sales were flat while September and October had declines so from that perspective, it’s a huge improvement. However, if you add the previous months and compare them to last year, it’s not a huge improvement. You might say that shopping season is getting later and later, but ads and commercials by retailers have been getting sooner and sooner where I live. Which one is it? Or do retailers just have to spend even more to encourage people to shop?

One of the components that contributed to the increase is a 2.3% rise in gas station sales, versus a 5.3% decline in October. Yep - today’s celebration of the retail sales figure is partly due to spending more on gasoline and for some reason, that is not exciting to me. Furthermore, the best category in today’s report came from the electronics component which showed a 4.6% improvement and the strongest gain in that category since the heavy gift card month of last January. Of course, none of this should be surprising since many of the hot electronics products like the Nintendo Wii or the Sony Playstation were not available until November and the Black Friday discounts also suckered people into stores. As Best Buy said yesterday, they had to cut prices to generate sales growth and compete with Wal-Mart and other electronics retailers.

Don’t worry - as the old saying goes… “Sure we’ll lose money on every sale but we’ll make up for it on volume.” I recognize that it won’t be that extreme and that they are not losing money on everything, but it was worth making the point. I agree that today’s report says good things about consumer spending, and that retail is holding up despite the “substantial cooling” of the housing market. However, it doesn’t say much about the health of retailers so if you are looking at today’s data as an all clear to buy retail stocks, make sure to kick the tires really hard and shop around for the few that are good deals.