Upscale Retail Customers Open Their Wallets Wider in March

Wealthy consumers stepped up their buying in March, resulting in better-than-expected sales for some high-end sellers and offering new hope for an overall economic recovery.

Menswear, another long-suffering part of the retail business, also saw a bit of a pickup, retailers said Thursday.

In addition to gains reported earlier by some key large jewelry store chains and apparel manufacturers--and continued strong results from discount retailers--Tuesday’s reports seemed to offer new evidence of a steady improvement for retailers, a key indicator for the broader economy.

“These are parts of the retail business that went into recession first,” said Todd Slater, a retail analyst with Lazard in New York. “We’re in the early stages of a recovery and the consumer is hanging in there.”

Saks Inc. on Thursday reported a 2.4% gain in stores open at least a year, well above predictions of a mid-single digit decline in sales. Saks also reported that its New York flagship store was recording better sales than the chain’s average--another positive sign for luxury retailers because it is an indication of a revived tourist trade in New York City, an important source of revenue for many high-end sellers.

Last week, luxury seller Neiman Marcus Group Inc. also reported a 2.4% gain.

“The luxury retailers have not lost their customer; what’s happened is that their core customers have been buying less--buying one rather than two cashmere sweaters at $400 a pop,” said Stacy Turnof, an analyst with Merrill Lynch in New York. “Now it’s a matter of customers increasing their transactions.”

Nordstrom Inc., which on Wednesday reported an overall sales loss of 1.1%, said that high-end designer goods were one of its better categories, beating out more moderate items.

An increase in sales of men’s clothing, Slater said, comes as men are replenishing their wardrobes after a roughly two-year period when many bought little, if any, clothing. Slater noted growth in men’s business at Gap Inc.’s Banana Republic, American Eagle Outfitters Inc. and Men’s Express, a division of Limited Inc. that used to be called Structure.

Sales comparisons for March benefited in part from what is known as the “Easter shift”--a calendar quirk that is likely to negatively impact April same-store sales numbers.

March sales this year benefit from the early Easter, when holiday promotions tend to boost sales. Same-store sales numbers for March also may appear bigger than they would otherwise because the figures are compared with those from the same month a year ago, when Easter fell in April.

Same-store sales, or sales from stores open at least a year, are considered an important measure of a company’s overall health because the figure excludes new and closed stores.

Still, many analysts noted that a cold snap in the Midwest was a drag on sales, which otherwise might have been even stronger.

Overall, retail sales gained 6.2% in March when compared with a year ago, according to Bank of Tokyo-Mitsubishi in New York. The March gain is the strongest since April 2000, according to that tally.

Goldman Sachs said its index of retail sales gained 5.6%.

Once again, discount stores led the sector, with Wal-Mart Stores Inc. reporting a 9.5% gain in same-store sales as compared with a year ago, Target Corp. reporting a 9.4% comparable-store gain in its discount stores and Costco Wholesale Corp. posting a 7% rise in stores open at least a year. Kohl’s Corp. reported a 9.1% gain.

Department stores, meanwhile, mostly suffered, with May Department Stores Co. posting a 6.9% sales decline, Target’s Mervyn’s California reporting a 2% decline and its Marshall Fields stores posting a 6.7% sales loss. Federated Department Stores Inc., which posted a 2% sales decline, still came in better than expected.

Sears, Roebuck & Co. on Wednesday reported a 4.7% sales decline.

And while luxury sellers have fared better, especially compared with some of the laggards in the retail sector, analysts have said a full-scale turnaround for high-end merchandise is likely to be gradual.

“It’s kind of like Groundhog Day--the wealthier people are raising their heads out of the hole after hunkering down for a while,” said C. Britt Beemer, chairman of the Charleston, S.C.-based America’s Research Group.

“It isn’t widespread by any means, but even my car dealer clients say that more and more shoppers are coming in and looking at the luxury cars,” Beemer said.