Retailers report 4th consecutive month of gains
NEW YORK — Warmer weather and an earlier Easter enticed shoppers into stores for spring merchandise in March, helping retailers post strong sales gains for the month.
Discounter Target Corp., department store Macy’s Inc., clothier Gap Inc. and Victoria’s Secret parent Limited Brands Inc. posted double-digit increases that beat Wall Street analysts’ expectations.
Overall, sales in stores open at least a year rose 9 percent in March, based on an index of 31 retailers compiled by the International Council of Shopping Centers.
Sales in stores open at least one year are an important measure of retailers’ health because they exclude the effects of stores that open or close during the year.
“The consumer is really coming out of hibernation and feeling better about their situation,” said Ken Perkins, president of RetailMetrics, a research firm.
Retailers benefited from several positive factors during the month, Perkins said. Most Easter sales came in March, after the holiday came more than a week later last year. Also, March 2009 was also when consumer frugality resulting from the financial meltdown and recession was near its deepest.
But even outside of those benefits, sales improved as customers sprung for spring merchandise, particularly clothing.
“We saw all month larger crowds in stores,” Perkins said, “In both mall and off-mall stores.”
It was was the fourth straight month of gains and the strongest one-month showing since March of 1999, according to Mike Niemira, chief economist of the ICSC. Results fell within his expectations for an 8 percent to 10 percent rise.
The monthly index excludes Wal-Mart Stores Inc., which stopped reporting monthly sales last year.
“It does seem the nice weather and improving economy all contributed to this stellar performance,” he said.
But he added that it is best to look at March and April together for a more complete picture of consumer spending.
“The true underlying strength is hard to assess until you have April results,” he said. Easter probably accounted for 4 to 5 percentage points of the monthly increase, he said.
He expects sales in stores open at least a year will be flat to down 3 percent in April because of the Easter shift.
Analysts study retailers’ monthly reports because most economists agree a robust turnaround in consumer spending is essential for any long-term recovery. Consumer spending accounts for as much as 70 percent of all economic activity.
Consumers area still uncertain about the economy and jobs. Last week the Conference Board said consumers’ confidence in the economy rebounded in March, but the index is still below the reading that is considered healthy. And unemployment remains high. The number of newly laid-off workers seeking unemployment benefits rose last week, a sign that jobs remain scarce even as the economy recovers. The Labor Department said Thursday that first-time claims increased by 18,000 in the week ending April 3, to a seasonally adjusted 460,000. That’s worse than economists’ estimates of a drop to 435,000, according to a survey by Thomson Reuters.
But March results show consumers are willing to spend on some items, such as new spring clothing, and a wide variety of merchants showed strength.
Target Corp. said sales in stores open at least a year rose 10.3 percent, helped by strength in its clothing business, typically a weak spot for the company. The discount retailer said it expects its first-quarter results to beat analyst expectations by 10 cents or more. Analysts expect a profit of about 75 cents per share in the quarter.
TJX Cos., which owns T.J. Maxx, Marshalls and other discount stores says sales at stores open at least a year climbed 12 percent in March, prompting the company boosted its fiscal first-quarter and full-year earnings expectations.
Department stores, one of the hardest-hit sectors during the recession, showed strong gains.
Macy’s said sales in stores open at least one year rose 10.8 percent, well ahead of the 7.9 percent gain forecast by analysts. The company, based in Cincinnati said, results were boosted by a 40 percent jump in online revenue and a strong response to spring fashion.
The luxury sector, another hard-hit sector, showed strength as well.
Nordstrom Inc.’s sales in stores open at least one year rose 16.8 percent, and Saks Inc.’s rose 12.7 percent, both beating analyst predictions.
As for mall stores, Gap Inc. reported sales in stores open at least a year rose 11 percent, above the 3.7 percent analysts polled by Thomson Reuters predicted. That includes an 11 percent rise at namesake Gap stores, a 10 percent rise at Banana Republic and a 13 percent rise at Old Navy.
Limited Brands Inc. saw a 15 percent gain, the third straight monthly increase for the operator of Victoria’s Secret, Bath & Body Works and other stores.
One weak spot was Abercrombie & Fitch Co., which reported a 5 percent increase, but missed expectations for a 6.6 percent rise.
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