Retailers Report 4th Consecutive Month of Growth
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.
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.”
Of 20 retailers that reported results early on Thursday, 18 beat analyst expectations and 2 missed, according to Thomson Reuters. Analysts are predicting the fourth straight month of gains.
Because of the earlier Easter, analysts say it is best to look at March and April together for a more complete picture of consumer spending. Still, analysts study retailers’ March reports because most economists agree a robust turnaround in consumer spending is essential for any long-term recovery.
John Long, retail strategist at Kurt Salmon Associates, cautioned the sustainability of the recovery will only be evident in the months to come, because strong March sales figures were widely expected.
“As we get into the back half of 2010,” when comparisons to last year become more difficult, “we’ll start to find out how sustained this kind of performance will be,” he said.
And fears about jobs and the economy linger.
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.
Still, 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.
Rival Wal-Mart Stores Inc. stopped reporting sales results on a monthly basis last year.
The department-store sector, one of the hardest-hit 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.
Nordstrom Inc. rose 16.8 percent, while analysts predicted a 10.6 percent rise.
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.
Costco Wholesale Corp. said that sales at stores open at least a year rose 10 percent in March, buoyed by strong growth overseas. That beat analyst expectations of a 9.3 percent rise.
Limited Brands Inc. said Thursday that sales at stores open at least a year grew 15 percent in March, the third straight monthly increase for the operator of Victoria’s Secret, Bath & Body Works and other stores.
American Eagle Outfitters Inc., which sells jeans and T-shirts to teens, said sales in stores open at least one year rose 15 percent, above the 10.8 percent analysts expected.
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.
MAE ANDERSON,AP Retail Writer NEW YORK