2nd UPDATE: Large US Retailers See Softness In April Sales
May 03 2012 - 1:11PM
Dow Jones News
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;
karen.talley@dowjones.com
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