Weather Puts Chill on Retail Sales
April sales for many U.S. retailers met or fell below expectations as cold, rainy weather reduced store traffic and apparel sales and signs of a slowdown in the economy prompted shoppers to rein in spending, analysts said Thursday.
Lower-than-expected sales in March and April prompted first-quarter profit warnings from discounter Kmart Corp. and casual apparel retailer Gap Inc. But two women’s apparel retailers, Talbots Inc. and AnnTaylor Stores Corp., announced higher profit expectations along with their sales reports.
Initially, analysts expected April retail sales to benefit from the Easter holiday, which fell late in the month this year. Easter typically marks the start of the spring shopping season, and apparel sales are dependent on warm weather.
“Certainly weather had an impact, especially in the East and mid-Atlantic,” said Wayne Hood, retail industry analyst with Prudential Securities.
“But there are economic variables that have begun to slow. Real income has slowed sequentially, the unemployment rates we have seen bottomed out, consumer confidence has declined and the housing market looks weak,” he said.
Kmart reported a 0.8% drop in April same-store sales, which track stores open for at least a year, and said its first-quarter earnings would fall about 6 cents a share below the 11 cents reported a year ago.
Lehman Bros.’ same-store sales growth index rose 7.9% in April, compared with a 3.6% rise in the year-ago period, when Easter sales were included in March results.
Bank of Tokyo-Mitsubishi reported chain-store sales rose 7.9% from April 1999. That figure, based on an average of sales data from 77 stores, topped its forecast for industry sales growth of about 7%. The firm initially looked for April same-store sales growth of 7% to 9%.
In contrast to its competitors, Wal-Mart Stores Inc., the world’s largest retailer, posted solid gains in April. Wal-Mart said total company same-store sales rose 10.9% in April, which topped analysts’ expectations for gains ranging from 8% to 10%.
Sears, Roebuck & Co., the No. 2 U.S. retailer, said its sales at stores open at least a year rose 2.4% in April compared with the same month a year ago. That matched analysts’ expectations for gains of 2% to 4%. Sears said both apparel and home improvement sales were hurt by cooler temperatures.
Gap, which reported a same-store-sales gain of 7% for the month, less than gains of 10% some analysts had forecast for all of its stores, said Wednesday that its first-quarter earnings may be 1 or 2 cents a share lower than expected because of a slow Easter shopping period.
Talbots reported a 14.7% surge in same-store sales and said it expects earnings of $1.02 to $1.04 a share, well above analyst expectations of 90 cents.
AnnTaylor reported a 1.4% drop in same-store sales, but said it sees higher-than-expected first-quarter operating profit of 53 cents a share.
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April Retail Sales
U.S. retailers said sales rose 7.9% in April, just below expectations despite the Easter holiday. Still, consumers are showing no signs of nervousness in the face of higher gasoline prices and a volatile stock market.
Discount
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Total sales % change Same-store* Chain (in millions) from 1999 % change Wal-Mart $14,140 +28.4% +10.9% Kmart 2,770 +0.8 -0.8 Target 2,460 +17.0 +11.1 Costco 2,270 +13.0 +9.0
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Department
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Total sales % change Same-store* Chain (in millions) from 1999 % change Sears 2,213 +3.9 +2.4 Federated 1,133 +5.2 +5.2 JCPenney 1,092 +3.3 -3.4 May 1,003 +5.2 +1.8 Gottschalk’s 38 +18.0 +16.0
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Apparel
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Total sales % change Same-store* Chain (in millions) from 1999 % change Gap 966 +31.0 +7.0 Limited 669 +13.0 +14.0 Hot Topic 45 +59.0 +24.1 Gymboree 43 +23.0 +19.0 Pacific Sunwear 38 +33.3 +1.6
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Other
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Total sales % change Same-store* Chain (in millions) from 1999 % change Circuit City 785 +18.0 +14.0 Pier 1 91 +17.7 +12.5
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Source: Companies listed
*Stores open for at least a year
