Retailers See Tepid Sales in March
biz.yahoo.com
Thursday April 6, 10:09 am ET
By Anne D'Innocenzio, AP Business Writer
Nation's Retailers Report Tepid Sales in March on Cooler Weather, Later Easter
NEW YORK (AP) -- A moderating economy and cooler weather gave consumers little incentive to shop last month and left retailers with tepid sales for the second month in a row. The later arrival of Easter this year also hurt March business.
As the nation's merchants reported their monthly results Thursday, Wal-Mart Stores Inc., J.C. Penney Co., Gap Inc., Abercrombie & Fitch Co. and Sharper Image Corp. were among the disappointments. Bright spots were wholesale club operator Costco Wholesale Corp. and Nordstrom Inc., both of which reported sales results that beat Wall Street expectations.
"We are seeing the economy slowing down, and that is affecting same-store sales," said Jharonne Martis, an analyst at Thomson Financial.
Martis noted that the downbeat results from teen retailers, whose customers had been splurging, show that even younger shoppers are not spending as much of their discretionary income.
Martis said that based on 50 merchants that had reported results so far, 42 percent beat estimates, while 58 percent missed expectations.
The tempered sales reports followed a disappointing February. January was a robust month as consumers, armed with holiday gift cards, shopped with gusto.
While temporary factors like the lateness of Easter and cool weather helped limit spending, analysts also said consumers are contending with higher interest rates, which makes financing debt more expensive, and higher gasoline prices. One positive factor has been solid gains in the job market, which helped consumer confidence rebound in March to a near four-year high.
A report from The Labor Department released Thursday provided further evidence of a strong job market. The number of Americans filing claims for unemployment benefits fell for a third straight week. The government said that 299,000 laid-off workers applied for jobless benefits last week, down 5,000 from the previous week after declines of 8,000 and 7,000 in the two previous weeks.
Still, analysts say retailers were partly to blame for what is winding up to be a lackluster spring selling season. This spring, stores are showing a great deal of beige and white clothing, a big difference from the bright colors dominating the selling floors a year ago. Teen retailers are doing well with cargo capris, but there isn't one fashion item that is exciting older consumers.
"There's not a lot of compelling fashion," said John Morris, retail analyst at Harris Nesbitt.
Wal-Mart posted a slim 1.4 percent gain in same-store sales, in line with the 1.2 percent estimate from analysts surveyed by Thomson Financial. Same-store sales are sales at stores open at least a year and are considered the best indicator of a retailer's performance.
Wal-Mart blamed a late Easter, which falls on April 16 and is three weeks later than last year, for depressing results. The retailer said it expects same-store sales gains to improve to 4 percent to 6 percent in April.
Because of the calendar shift, retailers and analysts look at March and April results combined to assess sales trends.
Rival Target Corp. had a 2.2 percent gain in same-store sales, in line with the 2.1 percent increase analysts expected.
Costco Wholesale Corp.'s same-store sales rose 7 percent, beating the 5.9 percent estimate.
Upscale Nordstrom posted a solid 4.3 percent gain in same-store sales, better than the 3.4 percent forecast.
But moderate-priced department stores had more modest gains. Federated Department Stores, which acquired May Department Stores Co. last year, saw its same-store sales unchanged from a year ago. Analysts had expected a 0.3 percent decline. Same-store sales include only Macy's and Bloomingdale's locations. It also forecast a same-store sales decline of 2.5 percent to 3.5 percent in April, reflecting a late Mother's Day.
J.C. Penney, whose results typically please Wall Street, had a disappointing 1.0 percent decline in same-store sales in its department store business. Analysts expected a 2 percent gain.
Limited Brands Inc. had a modest 2 percent gain in same-store sales, below Wall Street's 2.7 percent estimate.
Gap, which continues to struggle to find the right merchandising formula, suffered a 13 percent drop in same-store sales last month, worse than the 7.3 percent decline Wall Street expected.
"Our March performance reflects the challenges we face to increase the frequency of customer visits to our stores," said Sabrina Simmons, senior vice president, treasury and investor relations, in a statement.
Sharper Image posted a 29 percent drop in same-store sales, worse than the 20.2 percent decline analysts expected.
Furniture retailer Bombay Co. struggled with a 1.7 percent decline in same-store sales, worse than the 1.3 percent gain analysts projected.
Teen retailers, which have been on a winning streak, also saw business slow last month. Abercrombie & Fitch said same-stores sales were unchanged in March from a year ago. Analysts had expected a 3.6 percent increase.
On Wednesday, American Eagle Outfitters Inc. said same-store sales rose 3 percent, less than the 3.8 percent forecast.
Hot Topic Inc. also had disappointing results, posting a 12.7 percent decline in same-store sales. Analysts expected an 8.7 percent drop. As a result, the company reduced its earnings outlook for the first quarter. |
