Tuesday April 10 12:58 PM ET
March Retail Sales Seen Cooler
By Monica Summers
NEW YORK (Reuters) - Sales for U.S. retailers, the majority of which have already been battling a significant slump in consumer spending, are likely to be dampened even more in March as gray skies, rainy days and unseasonably cool weather continue to keep shoppers shuttered in at home.
Although the final week of the five-week period enjoyed a boost in sales as consumers got a sneak peek at some sunny spring weather, the majority of retailers, particularly those that sell season-specific goods like apparel and outdoor products, were still seeing sales tracking below plan.
The Redbook Average for U.S. same-store sales rose a meager 2.2 percent in March compared with a monthly target of 3.2 percent, according to Instinet Research. Most retailers are expected to report monthly sales data on Thursday.
``March is typically the most important month of the quarter being five weeks in length, but has not yet provided a good read on spring fashion, given the unseasonable weather,'' said J.P. Morgan retail analyst Shari Schwartzman Eberts.
``Without a rebound in sales in April, (first-quarter) estimates are likely to prove too high for many names due to a combination of soft sales and the likelihood of weaker margins as retailers are forced to cut prices to clear spring inventory,'' Schwartzman Eberts said.
Telecheck, a unit of First Data Corp. (NYSE:FDC - news), reported same-store sales in March rose 2.9 percent from a year earlier, Telecheck surveys the dollar volume of checks written by customers at the company's 228,000 subscriber locations.
Department Stores, Discounters Suffer Spring Cooldown
Among those likely to suffer most are department stores, which depend upon favorable spring weather to lure consumers into the malls, and possibly the discount retailers for which March makes up a significant portion of first-quarter sales.
Sales in the fourth week of March came in below plan for many of the nation's top retailers, including No. 1 player Wal-Mart Stores Inc. (NYSE:WMT - news), No. 2 Sears, Roebuck and Co. (NYSE:S - news) and No. 3 player Kmart Corp. (NYSE:KM - news).
Wal-Mart, the world's largest retailer, is expected to post a modest three percent gain in same-store sales -- or sales at stores open at least one week -- below its expected four percent rise, while Sears is expected to see same-store sales drop two percent, well below its expected gain of two percent.
Kmart is also expected to see a modest one percent gain in sales, while Target Corp. (NYSE:TGT - news), the nation's fourth largest retailer, is expected to come in closer to plan with a 2.5 percent increase in same-store sales for the month.
The same-store sales figures for both Kmart and Target are coming in slightly below targets. Kmart's plan for the month was a two percent gain, while Target's plan was for a three percent gain.
Among department stores, Kohl's Corp. (NYSE:KSS - news) continues to be a winner after it posted a 48 percent rise in fourth-quarter earnings in mid-March and heightened growth prospects.
``Kohl's continues to be the clear winner within the group,'' Deutsche Banc Alex. Brown retail analyst Joe Grillo said, adding that he expects Kohl's is on track to meet or exceed his estimate of a 4 to 5 percent rise in March same-store sales.
May Department Stores Co. (NYSE:MAY - news), which operates stores under such brand names as Lord & Taylor and Filene's, is expected to post a 4 to 5 percent rise in sales, despite the company's hope for a 6 to 7 percent gain for the month.
The department store chains that are not likely to fare so well -- hitting below targets -- are Federated Department Stores Inc. (NYSE:FD - news), which is facing a decline in sales of about one to two percent, and J.C. Penney Co. Inc. (NYSE:JCP - news), the No. 5 U.S. retailer, which is looking at a two percent decline in sales for March.
Spring Chill Cools Clothing Retail Sales
In addition, sales from specialty apparel retailers are likely to take a hit this month as a majority of the players have spent a good part of the spring watching warm-weather attire gather dust on shelves.
``March weather has been like a lion as unseasonably cool, wet weather across the nation has contributed to weak sales,'' said Richard Jaffe, retail analyst with UBS Warburg.
``However, we also think that the consumer has grown more guarded in his discretionary purchases in response to a more difficult economic environment,'' Jaffe said.
Analysts said they expect a majority of the specialty players such as Gap Inc. (NYSE:GPS - news), AnnTaylor Stores Corp. (NYSE:ANN - news), Talbots Inc. (NYSE:TLB - news), American Eagle Outfitters Inc. (NasdaqNM:AEOS - news), Limited Inc. (NYSE:LTD - news) and Intimate Brands (NYSE:IBI - news) all to post sales in the flat to negative five percent range for the month.
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