Many U.S. retailers posted smaller-than-expected sales declines for March in a sign that shoppers may be regaining confidence to open their wallets after more than a year of recession.
Of the two dozen or so retailers that have reported March sales at stores open at least a year, more than half topped Wall Street estimates, and a handful even raised their quarterly earnings outlooks on Thursday.
The numbers are still soft, but given the deluge of negative news we have seen in the retail space over the last several months, it's got to be somewhat encouraging, said Ken Perkins, president of Retail Metrics Inc. It looks like there is a little bit of an uptick, some pent-up demand ... for some discretionary spending.
Yet Perkins cautioned against reading too much into the results. It is difficult to foresee that really rallying and spiking in the near term, he said.
The International Council of Shopping Centers said it expected overall U.S. same-store sales to rise 1 percent to 2 percent in April and be flat to up 1 percent in May.
Meanwhile, the March results pleased investors. The Standard & Poor's Retail Index <.RLX> rose 3.2 percent in morning trading, outpacing a 2.2 percent gain in the wider S&P 500 Index <.SPX>.
A notable exception was Wal-Mart Stores Inc
At Wal-Mart's Sam's Club warehouse stores, discretionary categories such as jewelry, mattresses and furniture remained weak.
But Wal-Mart, whose shares fell 4.3 percent, said it expected earnings to be at the high end of its forecast for the fiscal first quarter, which ends April 30.
According to Thomson Reuters' revenue-weighted same-store sales index, overall sales fell 1.8 percent, double the expected decline, due largely to Wal-Mart's results. Excluding Wal-Mart, sales fell 5 percent, slightly better than the 5.2 percent drop that analysts expected.
Costco Wholesale Corp
Excluding the impact of lower gas prices, Costco posted a 4 percent gain. The warehouse club operator benefited from the later Easter, which brought an extra day of business in March because it did not have to close its stores for the holiday.
The later Easter was not good news for everyone.
Specialty apparel and accessories retailers American Eagle Outfitters Inc
Stage Stores and Wet Seal both said that in order to get a truer sense of their early spring sales trends, it will be necessary to look at the March and April periods together.
While retailers suffered from the Easter shift in March, they should get the flipside in April, said Michael Niemira, chief economist at the International Council of Shopping Centers.
Along with the later Easter come later spring breaks from many schools and universities. This hurt retailers such as Aeropostale and American Eagle, which cater to teens and young adults. American Eagle's March sales fell 16 percent, while analysts were expecting a 10.4 percent decline.
Nonetheless, American Eagle raised the bottom end of its quarterly earnings outlook, since it did a better job of controlling discounts, and its shares jumped nearly 9 percent.
Limited Brands Inc
(Additional reporting by Aarthi Sivaraman in New York, Nicole Maestri in San Francisco, Dhanya Skariachan in Bangalore and Jessica Wohl and Ben Klayman in Chicago; Editing by Lisa Von Ahn)