Retailers Posting Strong April Sales, But Caution Prevails
May 05 2011 - 8:39AM
Dow Jones News
Retailers are showing continued momentum, posting strong sales
for April with the aid of the Easter holiday, but some caution
prevails in the midst of surging gasoline prices and other
uncertainties consumers face.
The later Easter holiday did appear to spur buying as shoppers
hit stores during holiday breaks.
"Consumers, while cautious, are coming off a long winter and
responding to the newness that retailers are displaying in their
spring and summer merchandise," said Jharonne Martis, retail
analyst at Thomson Reuters.
But gasoline prices that continue to rise, still high
unemployment and the prospect of trying to pass higher cotton costs
along to customers have also made the group cautious.
Among the stronger performers, warehouse club Costco Wholesale
Corp. (COST) posted a 12% rise in April same-store sales, ahead of
expectations for 8.9%, despite being closed on Easter. Costco
operates gasoline stations at its sites and said higher fuel costs,
as well as strength in foreign currencies, aided results.
Limited Brands Inc. (LTD) remained strong, posting a 20% rise in
same-store sales, when 12.2% was expected. The operator of
Victoria's Secret and Bath & Body Works also raised its first
quarter guidance.
Regional department store chain Stage Stores Inc. (SSI) posted a
15.1% gain in April comparable sales, when 13.8% was projected. But
the company cut its first quarter and full-year view based on
earlier weakness and troublesome trends that it sees. "Our first
quarter sales were disadvantaged by February's storms and a
disappointing Easter business," Chief Executive Andy Hall said.
"While April sales benefited from the Easter calendar shift (to
later in the month), rising gas prices made for a more cautious
consumer."
Apparel retailer Cato Corp. (CATO) posted a 17% rise in
same-store sales, when 12.5% was projected and lifted its
first-quarter guidance.
Teen retailers enjoyed business from Easter breaks, with Hot
Topic Inc. (HOTT) ending a two-year string of monthly declines by
reporting an 11% jump in same-store sales and raising its full-year
outlook. Fellow teen retailer Zumiez Inc. (ZUMZ) also posted sales
growth that exceeded analysts' expectations. The company said that
while average prices rose, the amount of items bought fell,
suggesting that consumers, although buying, are being cautious with
their dollars. Buckle Inc.'s (BKE) same-store sales rose 14.5%,
ahead of expectations for 12.5%.
The 25 retailers tracked by Thomson Reuters are expected to show
an 8.4% rise in same-store sales, which would be their best showing
in a year. The figure, added to March's 1.7% rise, to "smooth" out
the performance of the two months as a way of accounting for this
year's late Easter, would equal what is considered a healthy 5%
gain.
There are also signs of trouble among retailers that do not
report monthly same-store sales, including Sears Holdings Corp.
(SHLD), which on Tuesday warned of a big first quarter loss. Big
Lots Inc. (BIG) on Thursday posted a decline in first quarter
sales, with the closeout retailer's chief executive saying business
softened in the back half of the period on what it believes were
"significant weather challenges."
Big Five Sporting Goods Corp. (BGFV) cited lower customer
traffic when posting weak first quarter earnings and giving a very
soft outlook. "We believe many of our consumers reduced purchases
of discretionary items in response to the challenging economic
environment, characterized by rising gas prices and high
unemployment," Chief Executive Steven Miller said in a
statement.
Gasoline prices are more than 30% higher than they were a year
ago and the pinch is being felt. A recent Stifel, Nicolaus survey
that found the number of consumers reporting that gas prices are
having a "significant impact" on spending and budgeting decisions
rose 12% year-over-year to 43%, the highest percentage since
September 2008.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
(Ian Thomson contributed to this report)
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