UPDATE: US Retailers Report Strong Momentum For March Sales
April 05 2012 - 10:10AM
Dow Jones News
Retailers generally reported strong sales for March, as warmer
weather, an earlier Easter and appealing fashions drew customers
in.
Standouts included Gap Inc. (GPS) and Target Corp. (TGT), while
Costco Wholesale Corp. (COST) and teen retailer Buckle Inc. (BKE)
came up short.
Easter falls two weeks earlier this year than in 2011, which
provided a sales boost for everything from apparel to seasonal
goods. March also benefited from unseasonably high temperatures in
many parts of the country, which brought customers into malls and
other shopping locations. Compelling fashions also played a role,
analysts said, with people more willing to pay fuller prices for
fresh merchandise. Retailers were also able to move older
merchandise at promotional prices.
"While apparel retailers still rely on discounting to drive
traffic, for the near-term, I believe that the industry is
benefiting for the first time in many seasons from a trifecta of
relatively clean inventories, seasonal demand, and decent
full-price selling," said Dave Weiner, retail analyst at Deutsche
Bank.
The 18 retailers tracked by Thomson Reuters posted a 6.9% rise
in March same-store sales when a 5.3% gain was expected. The figure
compares with 1.7% growth a year ago, when Easter came two weeks
later in April. One drawback of the March momentum is that it
likely took some sales from April, a number of retailers said.
Target cited "a healthy underlying trend" as it reported a 7.3%
rise in March same-store sales, when 5.4% was expected, and the
mass merchant lifted its first-quarter guidance.
Macy's Inc. (M) raised its March-April comparable-store sales
projection after same-store sales for March increased 7.3%, when
4.8% was expected. Same-store sales for the two months are expected
to be up 4.3% to 4.5%, compared with previous guidance for 3% to
3.5%. March sales "exceeded our expectations beyond the benefits we
anticipated" from an earlier Easter and the shift in a cosmetics
sale, Chief Executive Terry Lundgren said.
Fellow department store Kohl's Corp. (KSS) reported a 3.6% rise
when 2.1% was projected. Children's apparel, driven by Easter
demand, was the strongest business while men's and women's apparel
also performed well, the company said. Department store J.C. Penney
Co. (JCP) said last month it will not be reporting monthly
same-store sales while it revamps operations.
Longtime struggler Gap continued showing turnaround signs. The
apparel retailer reported an 8% rise in March comparable-store
sales, when 5.4% was expected. This was the first time analysts had
projected monthly growth for Gap since December 2010, and the
second month in a row the retailer showed strong momentum. February
same-store sales rose 4%, when a 1.4% decline was expected. The
company was "pleased with customer response to product across all
brands," in March, Chief Executive Glenn Murphy said.
Limited Brands Inc. (LTD), which operates Victoria's Secret and
Bath & Body Works, posted an 8% rise in March same-store sales
when 4.4% was expected.
On the high end, Saks Inc. (SKS) reported a 6.3% rise in
same-store sales, meeting analysts' expectations. Comparable-store
sales at Nordstrom Inc. (JWN) increased 8.6% when 5.8% was
expected.
Off-price retailers Ross Stores Inc. (ROST) and TJX Cos. (TJX)
both reported much-bigger-than-expected 10% gains in March
same-store sales, and both boosted their first-quarter earnings
targets.
The strength retailers have shown so far this year, which has
now extended into March, may have broad ramifications for down the
road. "Retailers are likely taking another look at their holiday
orders," said John Long, retail strategist at Kurt Salmon.
The month did have some laggards, though. Costco posted a 5%
gain in March same-store sales in the U.S. excluding gas, when 5.7%
was expected.
Teen retailers were mixed. Buckle Inc. (BKE) said same-store
sales increased 6.4%, when 8.8% was projected. Wet Seal Inc.
(WTSLA) same-store sales fell 7.8% when a 6% drop was projected.
Zumiez Inc. (ZUMZ) posted a 14.1% rise in same-store sales when
8.9% was expected.
The misses by some companies were surprising, analysts said.
"March was an absolute bull month for the consumer, so it leads me
to believe those retailers that fell short did not have products
and prices that resonated with consumers," said Joel Bines,
managing director of the retail practice at AlixPartners.
--By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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