Macys, Inc. (NYSE:M)
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Large U.S. retailers delivered disappointing sales for April, with Macy's Inc. (M), Target Corp. (TGT) and Saks Inc. (SKS) all falling short of expectations that were set low to compensate for a lack of Easter buying as the holiday occurred early this year.
The early Easter set up a powerful showing in March that largely didn't extend into April. Last month was also hit by colder weather in its latter half and gasoline prices that ratcheted higher.
April same-store sales rose 2.2% for the 18 retailers that report figures, according to analysts polled by Thomson Reuters. This represented the weakest monthly showing in a year and a half. The 2.2% increase compares with an 11.1% gain a year ago when Easter fell on April 24 and is beneath the range of 3% to 5% that retailers have been reporting so far this year. For March and April combined, to show the shift of the Easter holiday to early April this year, retailers reported a 4.5% gain. The growth is down from a 6.4% rise over the same two months last year.
Retailers were up against some big numbers from a year ago because Easter fell much later in April. However, "We knew Easter would produce a strong March, and that was built into analysts' expectations for April," said Barbara Kahn, professor of marketing at the University of Pennsylvania's Wharton School. "The fact that April's numbers have softness shows this is a rocky economic recovery and people are still a bit cautious."
Still, one month doesn't make a trend, and it will take later into the year to see just how cautious consumers are. What was missing by and large from the monthly sales reports were lifts to earnings guidance that usually come in the last month of a quarter, as April was.
Macy's, which was widely expected to raise its fiscal first-quarter guidance, instead reported a 1.2% rise in same-store sales that missed expectations for a 1.9% increase. The department-store chain, which has a recent track record of outdistancing projections, blamed the earlier Easter, the shift of a cosmetics sale into March from April, and Mother's Day falling later in May this year.
Fellow department store Kohl's Corp. (KSS) reported a 3.5% decline when a 1% drop was expected. Warm weather in March that pulled sales into that month and an earlier Easter contributed to the decline, Chief Executive Kevin Mansell said. The company said it remains comfortable with its first-quarter earnings guidance.
Target reported same-store sales rose 1.1% when 2.8% was expected. Chief Executive Gregg Steinhafel nonetheless said Target's "underlying sales trend remains quite healthy."
Costco Wholesale Corp.'s (COST) U.S. same-store sales excluding fuel rose 4%, when analysts were expecting 4.9%, the second month in a row that the mass merchant missed projections. "While a slowing contribution from [customer] traffic growth has been more than offset by average transaction increases over the past year or so, that appears to have reversed this quarter," said Robert Carroll, retail analyst at UBS.
Gap Inc. (GPS) reported same-store sales fell 2%, when a 0.8% decline was expected. Despite the miss, Chief Executive Glenn Murphy said spring merchandise "continued to do well across all brands," and the retailer offered a first-quarter earnings outlook that exceeded analysts' expectations.
There were some standouts. Nordstrom Inc. (JWN) reported a rise of 7.1% when 5.8% was projected. But fellow high-end department store Saks posted a 2% rise in same-store sales, when 4% was expected. Saks said it was hurt by excluding cosmetics and fragrances from a large sale it held in April.
Limited Brands Inc. (LTD), operator of Victoria's Secret and Bath & Body Works, narrowed its first-quarter guidance to the high end of its projection after issuing April same-store sales that beat expectations, coming in with a 6% gain, when a 4% rise was predicted.
Off-price retailer TJX Cos. (TJX) posted a 6% rise in comparable-store sales, when 4% was expected, and lifted its first-quarter and full-year earnings view, citing significant increases in customer traffic.
Among teen retailers, Zumiez Inc. (ZUMZ) reported a 10.1% rise in same-store sales when 6.8% was expected. The gain came on top of 17.5% growth in April 2011.
Wet Seal Inc. (WTSLA) posted a 9.6% drop in comparable-store sales, slightly worse than an expected 9% decline. Buckle Inc. (BKE) same-store sales gained 1%, when a 0.9 rise was projected.
Stage Stores Inc. (SSI) posted a 1% drop in same-store sales; analysts were looking for a 4.8% decline. The department-store chain said it saw comparable-store sales increases in its cosmetics, home and gifts, junior's, misses sportswear and petites categories during the month.
Geographically, the company's mid-Atlantic, Midwest, Northeast, South Central and Southwest regions all had comparable-store sales gains.
"We expected April to be challenging, given the negative impact of the Easter calendar shift and the timing shift of our Mother's Day event to May this year from April last year," Stage Stores Chief Executive Michael Glazer said. "However, April results were better than anticipated and, as a result, we exceeded our comparable-store sales expectations for the quarter."
-By Karen Talley, Dow Jones Newswires; 212-416-2196; email@example.com