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Shares in this ASX retailer is surging as outlook for the sector improved today

The Kathmandu Holdings Ltd (ASX: KMD) share price surged to a seven-week high this morning on the back of its latest trading update.

Shares in the outdoor gear retailer jumped 11.3% to $0.79 when the S&P/ASX 200 Index (Index:^AXJO) climbed 0.8% at the time of writing.

Kathmandu excited investors after reporting group online sales spiked 2.5 to 3 times higher in April compared to the same time last year. Management also outlined plans for a phased reopening of its 325 international stores.

Online sales surge

The big jump in online sales isn’t surprising as this is the only way consumers could buy the company’s products during the COVID-19 lockdown in its key markets of Australia, New Zealand and Europe.

Other retailers like department store Myer Holdings Ltd (ASX: MYR) have also reported a very large increase in online sales.

Despite the surge in internet sales, this is unlikely to offset the loss of business at Kathmandu’s physical stores.

Slow resumption to trade

This is why it was important for management to put in dates for the reopening of its Kathmandu and Rip Curl outlets, with most of the Australian stores expected to commence trading by end of this week.

Kathmandu and Rip Curl stores in New Zealand, North America, Europe, Brazil and Japan remain closed and will reopen as soon as government directives in each jurisdiction allow for it.

Australia is the group’s largest market and this isn’t the only ray of hope for the embattled sector.

Credit and debit card data from Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking GrpLtd (ASX: ANZ) is giving investors another reason to smile.

Consumer spending may be recovering

It appears that card spending is rebounding. While the figure is down 10% in the last two weeks of April compared to the same fortnight in 2019, it’s an improvement over the 20% plunge in mid-April, according to the Australian Financial Review.

CBA’s economist Gareth Aird noted that the data predates any easing in social restrictions to control the coronavirus outbreak. This could be because consumers were reacting positively to the slowdown in the rate of transmission of COVID‑19 alone.

Further boost for ASX retailers

The National Cabinet that includes the premiers of all states and Prime Minister Scott Morrison are meeting today to discuss easing restrictions and reopening the economy.

A gradual resumption back to normality will give the struggling retail sector another much needed boost.

It isn’t only Kathmandu shares that are outperforming today. The Premier Investments Limited (ASX: PMV) share price added 5.9% to $15.62 and Super Retail Group Ltd (ASX: SUL) share price gained 3.3% to $6.24 this morning.

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Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited and Commonwealth Bank of Australia. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited and Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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