March US Retail Sales Showing Unexpected Strength
April 07 2011 - 8:32AM
Dow Jones News
U.S. consumers spent March on the move, allowing many retailers
to deliver solid sales numbers that suggest resilience in the face
of challenges from a later Easter, poor weather and higher gasoline
prices.
Early reports from companies including warehouse club Costco
Wholesale Corp. (COST), Victoria's Secret operator Limited Brands
Inc. (LTD), and teen retailer Zumiez Inc. (ZUMZ) show considerably
better gains than expected at stores open a year or more.
Others, including Hot Topic Inc. (HOTT), Stage Stores Inc. (SSI)
and apparel retailer Cato Corp. (CATO) posted drops in same-store
sales from a year earlier, but the declines were less than analysts
projected.
"I wouldn't necessarily say the performances we're seeing for
March was remarkable, because expectations were so low," said John
Long, retail strategist at Kurt Salmon. "It will take April and the
Easter holiday to really gauge what's going on, especially on the
apparel side."
Wet Seal Inc. (WTSLA), a young women's retailer, reported a 4.7%
gain in same-store sales compared with expectations for a 1.7%
drop. Chief Executive Susan McGalla said the company estimated
same-store sales would have increased at a high single-digit
percentage without the effect of a later Easter, but that April
would benefit as a result.
The month did see robust growth in employment, with non-farm
payrolls showing the addition of 216,000 positions, spurring hopes
for a sustained employment recovery. The stock market also
continues rising, a plus especially for higher-end shoppers.
Costco, which posted a 13% rise in same-store sales when
analysts were projecting a 7.4% gain, continued to benefit from
higher gasoline prices at the pumps at its clubs, favorable foreign
exchange rates and the continued economic recovery in California,
where the company has a significant presence.
Costco's international operations showed continued growth, with
foreign sales rising 17% for the month, while U.S. sales increased
11%. Costco said its Tamasakai, Japan, warehouse, closed for
repairs from earthquake damage, is expected to reopen before the
end of the year.
While many other big players are still to be heard from,
including Target Corp. (TGT), Macy's Inc. (M) and Saks Inc. (SKS),
it is looking like retailers will beat expectations as a group.
The 25 retailers tracked by Thomson Reuters are expected to post
a 0.7% drop in same-store sales for last month, with much of the
reservations for a stronger showing the result of Easter being its
latest since 1943. The calendar shift pushed buying into April. The
March showing is expected to be followed by 7.5% gain in April. As
a result of the April momentum, sales for the two months are
expected to show 3.4% growth, which Thomson Reuters considers
healthy buying.
Easter fell on April 4 last year and is three weeks later this
year on April 24.
And consumers are expected to buy. U.S. retail spending on
Easter related merchandise, for everything from cookware to
clothing, is expected to average $131.04 a person this year, up 11%
from a year ago, the National Retail Federation said. The figure is
based on a poll of consumers. The increase suggests momentum and is
"a good sign leading into the much busier and important months to
come," said Matthew Shay, the trade group's president.
Retailers in coming months will look to back-to-school and
Christmas holiday buying to the lion's share of their annual sales.
They are also facing increasing cost pressures from rising cotton
and labor prices and will have to see what kind of price increases
shoppers will absorb.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
-Ian Thompson contributed to this story.
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