I really wonder if people are even remotely connecting the dots about an emerging subsistence crisis and some of these retail numbers right now. Grocery store sales will really be a clue. How much of it is just higher prices, including gasoline. Notice Costco same store sales for example. That's a big retailer, and gasoline seller.
Reuters
Clothing Demand Boosts Retailers' Sales
Thursday April 8, 10:24 am ET
By Jean Scheidnes
NEW YORK (Reuters) - Wal-Mart Stores Inc. (NYSE:WMT - News) and other U.S. retailers on Thursday reported sales growth for March that in many cases beat Wall Street's already high expectations, thanks to strong demand for spring clothing.
Analysts said consumers' enthusiasm was reinforced by cooperative weather, tax refunds, and an improving economy and stock market. However, they said they did not see support for consumers to continue spending at this rate.
Retail stocks traded broadly lower on Thursday morning on fears that March was as good as it would get for the foreseeable future. Shares of Wal-mart fell 2.2 percent to $56.67 and the Standard & Poor's Retailing Index (^GSPMS - News) was down 0.42 percent.
"Consumers will stay pretty active. But slowly expenditures have to come more in line with income growth," said Jim Luke, a portfolio manager with BB&T Asset Management.
Wal-Mart said U.S. same-store sales, a key retail gauge measuring sales at stores open at least a year, climbed 6 percent in March.
The world's biggest retailer had forecast a 4 percent to 6 percent increase, and analysts on average had expected 5.7 percent, according to research firm Thomson First Call (News - Websites) .
Wal-Mart cited strong demand for clothing and Easter merchandise. But it said the early Easter sales may have siphoned off some demand from April, and said April sales could veer to the low end of its expected range.
"We're getting the benefit of the most recent refinancing cycle and tax refunds. A lot of that stimulus is gone after May or so. So we're getting into a more difficult environment, plus we're coming up against some (tougher sales comparisons) later this year," Luke said.
March, a five-week period in the retail calendar, typically accounts for the biggest portion of first-quarter sales.
As expected, specialty apparel retailers chalked up strong sales, many of them in the double-digit range, as spring fashions enticed consumers to pay full price.
This year, spring fashion is marked by bright colors and feminine frills, in a clear departure from more subdued seasons past that were overshadowed by political violence and a shakier economy. A year ago, consumers were preoccupied with the war in Iraq.
Gap Inc. (NYSE:GPS - News), the biggest U.S. apparel chain, said same-store sales climbed 8 percent. The company, which owns the Gap, Old Navy and Banana Republic chains, beat analysts' average expectation for 5.9 percent growth, according to Thomson First Call.
Gap's upscale Banana Republic division was a standout with 25 percent growth.
Limited Brands Inc. (NYSE:LTD - News), whose stores include Victoria's Secret, Bath & Body Works, Express and Limited, reported a 15 percent same-store sales increase for March, beating its forecast of an increase in the low double digits.
Spring clearance typically starts at the end of March, but lean inventories and brisk full-price selling suppressed promotional activity throughout the malls. Combined with an earlier Easter, analysts said this would likely limit the potential for April sales. However, full-price selling bodes well for first-quarter profits.
Bebe Stores Inc. (NasdaqNM:BEBE - News), Children's Place Retail Stores Inc. (NasdaqNM:PLCE - News), Pacific Sunwear of California Inc. (NasdaqNM:PSUN - News), and AnnTaylor Stores Corp. (NYSE:ANN - News) all posted monthly increases in the range of 12 percent to 20.5 percent and raised their quarterly earnings guidance.
Abercrombie & Fitch Co. (NYSE:ANF - News), a bellwether of the teen sector, said its earnings could surpass analysts' expectations even though its same-store sales fell 1 percent in March.
Department stores also made a strong showing, as J.C. Penney Co. Inc. (NYSE:JCP - News), Nordstrom Inc. (NYSE:JWN - News), and Federated Department Stores Inc. (NYSE:FD - News), the parent of Macy's and Bloomingdale's, all raised profit expectations.
Neiman Marcus Group (NYSE:NMGa - News), the most luxurious of the department store group, posted 25.7 percent same-store sales growth.
"March should be about as good as it gets," said Martin Bukoll, retail analyst with Northern Trust. He said it was not clear whether recent strength in the U.S. job market was sustainable, and pointed to record high gasoline prices as a major obstacle to sales growth.
One retailer that benefited from high gasoline prices was Costco Wholesale Corp. (NasdaqNM:COST - News), which said same-store sales jumped 11 percent.
The warehouse club operator has gas stations at many of its warehouse clubs. Prices are usually cheaper than at traditional gas stations, so customers tend to flock to those stores when pump prices rise. U.S. pump prices hit record highs in March. |
