Retailers' March sales not as bleak as expected

By @ibtimes on

March was not as bad as expected for many retailers, suggesting that shoppers largely ignored higher gasoline prices and other concerns to treat themselves.

Retailers such as Costco Wholesale Corp, BJ's Wholesale Club Inc and Limited Brands Inc reported much stronger-than-expected results, while Gap Inc was one of a handful of chain to fall short of expectations.

The retailers that have the right assortment are still doing well, said Tom Clarke, director of AlixPartners' global retail practice.

U.S. retailers overall had been expected to show their first same-store sales decline since August 2009, in part because Easter falls three weeks later than last year, which delays some spring purchases.

Chilly weather and rising inflation also probably hurt discretionary spending.

Analysts were expecting a tally of 25 major retailers to show a drop of 0.7 percent in sales at stores open at least a year, according to Thomson Reuters. Of the first 17 retailers to report sales, 11 beat expectations.

While unemployment remains high, it has edged down in recent months, giving some people more wiggle room to shop.

This March I spent more than last March because I was searching for a job last March, said Jane Marcinkiewicz. A 37-year-old mother of two from New York's Harlem neighborhood, she works part-time at a department store.

Gap was a notable outlier. Its same-store sales fell 10 percent, or 3 percentage points more than expected. The clothing retailer blamed some of the weakness on the earthquake in Japan, where it has more than 150 stores.

Gap expects the problems in Japan to cut first-quarter earnings by about 4 cents per share, bringing them below the analysts' average estimate of 44 cents. The company's shares fell 3.3 percent to $22.30 in premarket trading.

LATEST EASTER IN DECADES

This year's Easter is the latest since 1943, which means holiday promotions will last all spring long, noted National Retail Federation Chief Executive Officer Matthew Shay.

With Easter falling on April 24 this year, 20 days later than in 2010, the bulk of sales of spring clothing, candy and other goods were probably delayed until April.

At the same time, shoppers have already started to pay more for groceries and gasoline, reducing the amount left for other purchases.

Now we're entering the period when retailers have to decide whether to increase prices or reduce gross margins, Clarke said. That risk is now here.

Costco's sales at stores open at least a year jumped 13 percent, or 8 percent excluding the impact of selling gasoline at higher prices and stronger foreign currencies. Analysts had expected a 7.4 percent increase, according to Thomson Reuters.

The top warehouse club operator said inflation was modest in meat and produce, and similar to what it had seen in recent months in fresh food overall.

At TJX Cos Inc, same-store sales rose across all warm-weather regions in the United States, which bodes well for the balance of the season, said Chief Executive Officer Carol Meyrowitz. She said TJX was very comfortable with the quarterly earnings outlook it gave in February.

March sales reports do not paint the full picture of the consumer economy as the retailers that still issue monthly figures account for only 10 percent of total U.S. retail sales, according to Customer Growth Partners President Craig Johnson.

Major retailers such as Wal-Mart Stores Inc, Home Depot Inc and many others do not give monthly tallies.

(Reporting by Jessica Wohl and Brad Dorfman in Chicago, Dhanya Skariachan and Phil Wahba in New York and Nivedita Bhattacharjee in Bangalore; Editing by Phil Berlowitz and Lisa Von Ahn)

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