U.S. retailers reported better-than-expected monthly sales figures for a second straight month in April, offering fresh evidence that consumers' willingness to spend is warming up with the spring weather.
Of the 31 retailers that reported April sales at stores open at least a year, 64 percent topped Wall Street estimates and a handful said they plan to report better first-quarter results than they had expected.
According to Thomson Reuters' revenue-weighted same-store sales index, overall sales rose 1.2 percent, surprising analysts who expected a decline of 0.2 percent, according to Thomson Reuters estimates.
Excluding Wal-Mart Stores Inc
Still, retail shares were relatively unchanged in morning trade, with the Standard & Poor's Retail Index <.RLX> up less than 1 percent.
Wal-Mart Stores Inc
The world's largest retailer cited demand for Easter merchandise. It has seen an uptick in sales of discretionary items like sporting goods, bedding and towels, as payroll taxes and gasoline prices come down.
Whereas Easter fell in March last year, it was in April this year, meaning that most holiday-related purchases occurred later, in a shift that artificially hurt retailers' March results and lifted April's sales tallies.
Other retailers that cited a benefit from the Easter shift include Abercrombie & Fitch Co
Lazard Capital Markets analyst Todd Slater noted that much of Gap's strength is from its lower-priced Old Navy chain improving its merchandise and attracting cost-conscious consumers looking to save money in the recession.
While trends at Old Navy are improving, we believe business momentum at Gap stores and Banana Republic continues to deteriorate, Slater said.
Nevertheless, the department store operator said it was prudent to keep its annual profit view of 40 cents to 55 cents per share unchanged, given the continued economic uncertainty.
TJX Cos Inc
While we are pleased that our performance has been above our expectations, allowing us to raise our first quarter earnings estimates, the economic environment remains uncertain, said TJX CEO Carol Meyrowitz. We remain cautious in our near-term outlook.
NOT ALL ROSY
Despite those signs of life, there were still some notable disappointments as consumers continue to focus on value.
Costco Wholesale Corp
Much of the consumer spending that took place in April was totally replacement driven, according to a new survey by America's Research Group, which added that there is no discretionary spending going on in America.
Whereas the Easter shift helped sales for many teen apparel chains as coinciding spring breaks boosted store traffic, it was negative for Costco, which closed its doors for the holiday and therefore had one less selling day.
Hot Topic Inc
FBR Capital analyst Adrienne Tennant called Hot Topic's results a speed bump on the road to recovery and removed the teen apparel chain from her list of top stock picks.
(Reporting by Martinne Geller, editing by Dave Zimmerman)