Retailers have weakest April on record
Sales at 53 U.S. retailers fell a combined 2.4 percent, according to a preliminary tally by the International Council of Shopping Centers -- the biggest monthly decline since the group began tracking the figures in 1970.
Thursday May 10, 2:38 pm ET
By Nicole Maestri
NEW YORK (Reuters) - Retailers reported the weakest April sales results on record on Thursday after cold, stormy weather and an earlier Easter holiday sapped demand for spring merchandise.
Sales at 53 U.S. retailers fell a combined 2.4 percent, according to a preliminary tally by the International Council of Shopping Centers -- the biggest monthly decline since the group began tracking the figures in 1970.
Wal-Mart Stores Inc. (NYSE:WMT - News) posted its largest same-store sales drop since it started releasing such figures in 1979, and 80 percent of retailers -- including AnnTaylor Stores Inc. (NYSE:ANN - News) and Gap Inc. (NYSE:GPS - News) -- reported April same-store sales that missed targets, according to Retail Metrics Inc.
The poor results came after the shift in the Easter holiday to April 8 this year from April 16 last year pulled sales into March. Retailers also faced a tough comparison to last April, when record warmth drove sales of spring merchandise like dresses and shorts.
"I don't think it (April sales) spells the death knell of the consumer, or that retailers are headed for some kind of a big-time slowdown in their (same-store sales) going forward," said Retail Metrics President Ken Perkins. "You have to take it in conjunction with the March sales."
Analysts and investors are watching retail sales closely to see how consumer spending, which accounts for roughly two-thirds of national economic activity, holds up in the face of rising gasoline prices and a slowing housing market.
Brean Murray, Carret & Co. analyst Eric Beder said a rebound in sales in the fourth week of the April period was a "bright spot" for many retailers.
But given that the fourth week was the only one that was materially warmer than a year ago, "it is unclear if this upside was a function of temperature, increased levels of discounting or a return by the consumer to the mall," he wrote.
The Standard & Poor's Retail Index (Chicago Options:^RLX - News) declined 0.6 percent in afternoon trading.
WEATHER WARNINGS
Last month marked the coldest April in 10 years, according to weather tracking firm Planalytics, and was punctuated by a storm that soaked much of the U.S. East Coast and snow storms in parts of the Midwest.
The wicked weather curtailed demand for warm-weather gear, prompting some retailers to issue warnings ahead of the sales results on Thursday.
Target Corp. (NYSE:TGT - News) said last month that its April sales at established stores would be "much weaker" than its forecast of a decline of 2 percent to 4 percent, while Wal-Mart said that meeting its first-quarter earnings forecast of 68 cents to 71 cents per share from continuing operations would be a challenge.
On Thursday Target reported a 6.1 percent drop in April same-store sales, saying it was hurt by a sales shortfall in the first two weeks of the month. But it said it remains on track to achieve its "overall financial expectations in 2007."
Wal-Mart, the world's largest retailer, reported a 3.5 percent decline in its U.S. April same-store sales, blaming both weather and the timing of Easter.
April same-store sales fell 4.6 percent at its Wal-Mart stores, while they rose 2.5 percent at Sam's Club.
The retailer said sales in its apparel and home categories at Wal-Mart stores were soft, as the cold weather crimped traffic and hurt sales of seasonal merchandise.
HOUSING WOES, WARNINGS
Michael Niemira, chief economist for the International Council of Shopping Centers, said weakness in the housing market was rippling into the retail sector, with retailers that sold home-related merchandise like furniture facing pressure.
"Until housing stabilizes we will continue to see the numbers weaker than the trends that we had over the last year or two," he said.
Department store leaders J.C. Penney Co. (NYSE:JCP - News), Federated Department Stores Inc. (NYSE:FD - News) and Kohl's Corp. (NYSE:KSS - News) all posted declines in same-store sales for the month.
J.C. Penney said May same-store sales were expected to be flat due to softness in home categories.
Retailers including Children's Place (NasdaqGS:PLCE - News), Pacific Sunwear of California Inc. (NasdaqGS:PSUN - News) and New York & Co. Inc. (NYSE:NWY - News) cut their first-quarter earnings forecasts after reporting weak April sales.
Children's Place cited lower-than-planned April sales, higher markdowns and unfavorable weather as reasons its first-quarter earnings would be below its expectations.
In a positive note, Costco Wholesale Corp. (NasdaqGS:COST - News) reported a better-than-expected 7 percent rise in April sales at stores open at least a year, helped by a calendar shift that resulted in an extra day of sales over the four-week period.
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