Consumers Return to Pre-Recession Spending, Savings Slide (SYY, CLX, CAL, UAUA, DTG, CAR, HTZ, KIRK)

If anyone thought that the “Great Recession” was going to change consumer behavior forever, as many pundits at the time predicted (we weren’t among them), well it’s time to rethink that line of thought. Consumer spending rose to above pre-recession levels in March, while the personal savings rate declined to 2.7%, the lowest since September 2008. In other words, the “new normal” is already passé and consumer behavior has reverted back to just plain old “normal.” This is typical of an economic recovery, and a good sign.

The Home Furnishing Retailer Stocks Index was the top performing tickerspy Index on the day, led by Kirkland’s (KIRK) with a 6% gain.

Stocks climbed on the day, with the Dow up 143 points to 11,152. The S&P rose 16 points to 1,202, while the Nasdaq jumped 38 points to 2,499. Oil edged up 4 cents to $86.19 a barrel, while gold moved $2.60 higher to $1,182.70 an ounce.

On the economic front, the Commerce Department said consumer spending rose 0.6% in March, a record high and in line with analyst estimates. The personal savings rate sank to 2.7%, the lowest level since September 2008. Meanwhile, construction spending edged up 0.2% in March, spurred on by government activity. Economists were expecting a drop of -0.3%.

In earnings news, shares of Sysco (SYY) slipped -1.6% despite the company reporting its first year-over-year sales growth since September 2008. For the period ended March 27th, the food distributor earned $247.6 million, or 42 cents per share, up from $226.2 million, or 38 cents per share, last year. Analysts were expecting EPS of 40 cents. Revenue grew 2.4% to $8.95 billion from $8.74 billion. A total of 62 pro investors counted the stock among their top 15 holdings at the start of Q1, as did nearly 300 tickerspy members.

Clorox (CLX) said its Q3 profit climbed 8% on increased volume and lower costs. The company also boosted the low end of its FY10 outlook. For the quarter ended March 31st, net income was $165 million, or $1.16 a share, which topped the $1.08 consensus. A year earlier, Clorox earned $153 million, or $1.08 per share. Revenue moved up 2% to $1.37 billion, while volume increased 3%. Looking forward, the company expects FY10 EPS of $4.20-$4.25, up from its prior view of $4.10-$4.25, with a 1-2% revenue increase. The consensus is for EPS of $4.24 on revenue of $5.54 billion. For FY11, Clorox guided for EPS of $4.50-$4.65 with revenue up 2-4%. Analysts are expecting EPS of $4.63 on revenue of $5.72 billion. The stock fell -1.0%.

In M&A news, Continental Airlines (CAL) and UAL (UAUA), the parent company of United Airlines, announced today that the two companies will merge in a $3.15 billion all-stock deal. Continental shareholders will receive 1.05 UAL shares for each share of common stock that they own. The new airline will be named United Continental Holdings. Shares of Continental rose 2.3% on the news, while shares of UAL climbed 2.4%.

Shares of Dollar Thrifty Automotive Group (DTG) surged 15.3% after Avis Budget Group (CAR) said it plans to top rival Hertz Global Holdings’ (HTZ) bid for the rental car company. Last week, Hertz offered $1.17 billion in cash and stock for Dollar Thrifty, valuing the company at $41 a share. The news sent shares of Avis down -0.3%, while Hertz shares dropped -6.0%.

Tags: CAL, CAR, CLX, DTG, HTZ, KIRK, SYY, UAUA