By Anna Prior
Retailers posted sharply higher sales in April as warmer
temperatures and a later Easter holiday helped push shoppers into
stores.
Thursday's results marked the second consecutive month that
same-store sales--an industry metric that gauges sales at stores
open at least a year--have topped expectations.
Only regional discounter Fred's Inc. posted lower sales and
missed estimates of the eight retailers tracked by Thomson Reuters,
while three companies with heavy weightings in the sales index--
Gap Inc., Costco Wholesale Corp. and L Brands Inc.--all recorded
strong sales results for the month.
But given the shifting Easter holiday, John Tomlinson, managing
director and head of retail at ITG Investment Research Inc., said
May will likely give the first clear read on most retail
trends.
Several industry watchers had forecast a pickup in spring
shopping amid pent-up demand following a harsh winter season. And
results from March and April are generally viewed together because
of the shifting nature of Easter, which fell about three weeks
later this year and moved into April from March last year.
Consumers continued to spend on big-ticket items as well in
April, as car buyers shrugged off concerns about the tepid economy
and streamed into U.S. auto dealerships, helping most car makers to
post higher new-vehicle sales.
Overall, the eight retailers tracked by Thomson Reuters posted a
6% increase in April same-store sales. Thomson Reuters had
projected the companies to record 2.8% growth versus a 4.3%
increase a year earlier.
For the two-month period, retailers reported 4.1% growth, up
from 3.5% a year earlier.
Many retailers, including the major department stores and most
big-box retailers, stopped reporting monthly sales data some time
ago, making it difficult to get a snapshot of the entire industry.
However, many retailers will be releasing their quarterly results
and outlooks in the next few weeks, which should help give a
clearer picture of the health of the sector.
Gap reported a 9% increase in April same-store sales, well above
the 0.1% growth expected by analysts. Results were bolstered by an
18% sales jump at the company's Old Navy brand, which benefited
from the later Easter holiday. Analysts had expected Old Navy to
record 1.4% growth.
Of Gap's other units, Banana Republic posted a 7% jump in sales,
compared with expectations for a 0.5% decline, while Gap recorded
3% growth when a 1.5% increase was expected.
Amid those strong results, Gap issued a quarterly profit outlook
ahead of expectations.
L Brands, formerly Limited Brands, said same-store sales rose 8%
last month, beating consensus estimates for a 4.3% increase, as the
company said the later Easter holiday benefited results. The
company also boosted its quarterly earnings outlook and noted that
lower promotional activity helped boost margins at some of its
brands.
By brand, Victoria's Secret reported an 8% increase in sales,
topping expectations for 4.7% growth, while Bath & Body Works'
same-store sales improved 8% when a 3.3% increase was expected.
Costco reported a 5% increase in April same-store sales,
excluding gasoline, exceeding estimates for 3.2% growth. Unlike
some of its peers, Costco's results were hurt by the later Easter
since it typically closes its stores for the holiday, leading to
one less selling day in the month.
Top performing categories at Costco included automotive, tires,
hardware, apparel, housewares and jewelry, though some of this
strength was offset by weaker performance for the office category.
The company also said same-store sales for consumer electronics
were slightly negative for the month.
Among teen retailers, Zumiez Inc. reported an 8.2% jump, handily
topping expectations for a 0.5% increase. Buckle Inc., meanwhile,
reported a 0.8% sales increase, while analysts had expected a 0.2%
decline.
Off-price retailer Stein Mart Inc. called out warmer weather as
it said same-store sales rose 8.9% in April, when 4.5% growth was
expected.
Meanwhile, Fred's said same-store sales fell 2.3%, missing
expectations for 2% growth, and the discount retailer cut its
quarterly sales and profit outlook. Strength in the company's
pharmacy department, was offset by a sales shortfall in other
general merchandise departments, Chief Executive Bruce Efird
said.
The company said it expects same-store sales to begin growing
again in June and said it is working to implement a new marketing
strategy.
Write to Anna Prior at anna.prior@wsj.com
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