Early Easter Sales Boots March Store Comps

In Reports, What's New, Industry News by Accessories Staff

New York–The early Easter holiday helped top U.S. retailers beat Wall Street’s sales expectations as a pickup in consumer spending expanded from discounters to department stores and junior specialty chains.

Monthly results also benefited from an improved job market and warm weather and the fact retailers could easily beat their 2009 figures. Last year, retailers posted a 5% decline in March. Overall, March same-store sales rose 9.1%, beating Wall Street’s forecast for a 6.3% increase, according to Thomson Reuters data. More than 90% of the 28 retailers that Thomson Reuters tracks topped estimates.

The International Council of Shopping Centers raised its March sales estimates this week 8% to 10% citing the April 4 Easter had shifted spending earlier. About $13 billion was spend for Easter this year mostly on clothing, food and candy, the National Retail Federation says.

Nonetheless, some retail executives and analysts fear the boom could be short-lived as consumers may have shifted much of their spending into March at the expense of future purchases. In fact, despite the positive earnings reports, many retail were mixed Thursday afternoon. Brian Sozzi, Wall Street Strategies analyst, attributes that to the fact that Wall Street hoped for significant same-store sales increases and stronger upward earnings revisions. Sozzi says that there still are concerns about how April sales will end up. Moreover, there is still concern that if retailers reinvest in inventory and reduce promotions and the consumer doesn’t respond, discounting will emerge potentially reducing earnings estimates in the second half of the year.

“March was a very solid month, but I think there’s more than enough hints that the American consumer is still fully not back,” says Brean Murray, Carret & Co analyst Eric Beder. “We’re going to see, barring a miracle, materially weaker numbers for April.” Some analysts believe a better indication might be combined March/April figures

Nothing the shift of Easter spending into March, Macy’s (M.N) Chief Executive Terry Lundgren said the earlier Easter would hurt April sales. The company said sales at stores open at least one year rose 10.8% in March from a year earlier, well ahead of the 7.9% increase analysts had expected, but it forecast flat results for April.

TJX  (TJX.N) said same-store sales were up 12%, far above estimates, prompting the off-price retailer to raise its profit outlook. But it sees much more modest same-store sales growth of 2% to 4% in April.

Higher Expectations

Other retailers that reported March sales above Wall Street expectations include Limited Brands (LTD.N). Same-store sales for the operator of lingerie chain Victoria’s Secret rose 15%, and its shares rose 1.5% in early trading.

Upscale department store Nordstrom (JWN.N) reported a rise of 16.8 %, compared with estimates of 10.6%. Warehouse club operator Costco‘s(COST.O) same-store sales rose a better-than-expected 10%.

Gap Inc. (GPS) continues to make progress on driving its top line sales after posting an 11% same-store sales gain in March.

“While we benefited from the Easter shift, our improved sales also reflect that customers are responding well to our brands’ spring assortments and value proposition,” says Sabrina Simmons, chief financial officer. Net sales for the five weeks to April 4 were up 12% from last year to $1.45 billion, compared with $1.29 billion last time. By division, comparable store sales for March were up 11% at Gap North America, rose 10% at Banana Republic North America, and were up 13% at Old Navy North America. International same-store sales were 5% higher than last year.

Kohl’s (NYSE: KSS) reported Thursday that total sales for the five-week month ended April 3 increased 26.4% over the five-week month ended April 4, 2009. On a comparable store basis, sales increased 22.5%.

Other retailers March reports include: Stage Stores (SSI) saw its total sales for the five week March period increase 12.0% to $140 million. Same-store sales increased 8.6% this year versus a decrease of 15.0% last year. Cato (CATO) said sales for the month were $105.7 million, a 26% increase. Same-store sales increased 24%. American Eagle Outfitters (AEO) announced that total sales for the five weeks ended April 3 increased 15% to $280 million. Same-store sales increased 15% for the month, compared to a 16% decrease for the same period last year. On Wednesday, youth apparel chains Hot Topic (HOTT.O) and Zumiez (ZUMZ.O) also handily topped expectations, and were followed by strong sales reports from Wet Seal (WTSLA.O) and The Buckle (BKE.N) on Thursday.

Some actual retail performance may be lagging behind how Wall Street expectations. For instance, Abercrombie & Fitch (ANF.N) came in short of forecasts with only a 5% rise and shares fell 3.2%.

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