When we were talking about retail sales earlier, I knew they had not been as good as expected but in light of April's report, it was hard to argue. I didn't remember til later that because of the Easter holiday, economists look at sales for April and March together when evaluating the quality of sales.
And the reality is.....this year's Easter retail was a fairly modest improvement over last year. Given the declining consumer confidence index and the drying up of housing equity money, things are not as bright as you would have us believe. Nonetheless, it still comes down to the same question.........a soft patch or a major turn? Again, time will tell.
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Retailers report modest sales in April
By Anne D'Innocenzio, AP Business Writer
05/13/2005
NEW YORK (AP) - Consumers overcame some of their reluctance to shop in April, giving the nation's retailers sales that modestly beat expectations. Results again varied widely among merchants, reflecting shoppers' uncertainty about the economy and their struggles with higher gasoline prices.
As stores released their monthly sales figures Thursday, Wal-Mart Stores Inc., the world's largest retailer, and rival discounter Target Corp. turned in disappointing performances. But teen retailers, luxury stores and wholesale clubs had substantial sales gains. Other standouts included moderate-price department stores including J.C. Penney Co. Inc.
"The results were uneven, but there were clear pockets of strength," said Michael P. Niemira, chief economist at the International Council of Shopping Centers. The International Council of Shopping Centers-UBS sales tally of 70 stores posted a 2.2 increase for the month, better than the 2 percent gain Niemira expected. The tally is based on same-store sales, which reflect business from stores open at least a year; they are considered the best indicator of a retailer's health. An earlier Easter, which fell in March this year, depressed the month's results. Without the calendar shift, April sales would have been up 3.7 percent, about in line with last year's same-store sales pace. Analysts tend to look at the March and April months together, which resulted in what Niemira called a modest 3.1 percent gain.
The April results, while uneven, did raise hopes that consumers might spend a little more freely in the months ahead. After enjoying solid sales in January and February , stores posted disappointing results in March. Analysts were concerned that April sales would fall below modest forecasts as unseasonably cool weather and a bumpy economy forced many stores to step up discounting on spring apparel.
But most retailers managed to preserve profits, according to Todd D. Slater, retail analyst at Lazard Ltd. Several major retailers, including Federated Department Stores Inc., J.C. Penney Co. Inc. and Talbots Inc., raised their first-quarter earnings outlook Thursday based on stronger-than-expected business.
Retailers' stocks rose Thursday. Wal-Mart's shares gained 12 cents to $48.57 on the New York Stock Exchange, where it has traded in a range of $46.20 to $57.89 over the past 52 weeks. Target rose $1.00, to $47.28; it has ranged between $40.03 and $54.14 over the 52-week period. Federated Department Stores Inc. was up $2.20 at $62.37, with a 52-week range of $42.80 to $65.08.
"Overall, it was a pretty solid report," said Gint Rimas, a senior analyst at Thomson Financial. "Expectations were lower, but consumers are still out there shopping."
Still, Americans are very concerned about the economy, according to measures of consumer confidence that have fallen for three straight months, and they've had to factor higher gasoline prices and interest rates into their budgets. Meanwhile, the job market is still uncertain.
The Labor Department said Thursday the number of Americans filing new claims for unemployment benefits rose to 333,000 last week, reflecting a larger-than-expected gain in 11,000 benefit applications from the previous week. It was the second consecutive weekly increase following a rise of 22,000 the previous week.
The nation's discounters, whose customers have been particularly hurt by high gas prices and job weakness, had another lackluster month. Wal-Mart had a 0.9 percent gain in same-store sales, slightly below the 1 percent consensus prediction of Wall Street analysts polled by Thomson Financial.
Wal-Mart did get a boost from Sam's Club, which posted a 4.9 percent gain for the month. That compared with the company's flagship discount stores, which had only a 0.1 percent increase.
Rival Target had a 1.3 percent gain, below analysts' 2.3 percent forecast.
Same-store sales at Family Dollar Stores Inc. rose 0.9 percent, well below Wall Street's 3.4 percent forecast. The retailer cut its outlook for the current quarter.
But Costco Wholesale Corp. enjoyed a same-stores sales gain of 8 percent, surpassing the 6.7 percent analyst estimate. And BJ's Wholesale Club had a 8.4 percent gain, outpacing the 4.1 percent forecast.
Ken Perkins, president of Retail Metrics LLC, a research firm in Swampscott, Mass., noted that wholesale clubs have done well because they tend to appeal to a higher-end consumer who hasn't been vulnerable to the economy's fluctuations. Gas prices have actually helped wholesale clubs, since many operate gas stations at their stores, he said.
Most mid-level department stores had a surprisingly solid performance. Penney had a 3.6 percent gain in department stores, above the 1.7 percent Wall Street forecast.
Federated posted a 2.8 percent increase, better than the 0.5 percent estimate.
May had a 1.5 percent increase for the month, better than the estimated 2.0 percent decline.
But Saks Inc., pulled down by its moderate-priced stores, had a 0.3 percent gain in same-stores sales, lower than the 2.1 percent forecast.
Upscale department stores again enjoyed robust gains. Nordstrom Inc. had a 6.9 percent gain in same-store sales, above the 3.6 percent forecast. And Neiman Marcus Group Inc. had a 14.2 percent gain, beating the 6.2 percent estimate.
Apparel retailer Talbots Inc. had a 7.1 percent gain, far surpassing the 2.3 percent forecast.
But Gap Inc. suffered a 5 percent decline in same-store sales, worse than the 2.4 percent forecast by Wall Street. The company lowered its first-quarter profit outlook as a result of heavy discounting of spring merchandise.
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