U.S. Retailers See Sales Soar in April

Consumers buying cars, clothing and home improvement materials drove U.S. retail sales in April to the largest monthly gain since October, the government reported Tuesday, easing fears of a consumer slowdown and offering more evidence of a strengthening economy.

The 1.2% gain in retail sales over the previous month was double the growth rate economists had expected.

Adding to the upbeat news, several large retail chains reported better-than-expected quarterly earnings. They included the world’s largest retailer, Wal-Mart Stores Inc., along with J.C. Penney Co., discounter TJX Cos. and jewelry sellers Tiffany & Co. and Zale Corp.

The surprising retail sales gains and profit reports sparked a stock market rally, with particularly strong stock price rises for Wal-Mart and Sears, Roebuck & Co.

“The consumer continued to ride the wave of strong wage growth and solid housing gains that have followed interest rate declines,” said Matt Fassler, a retail analyst with Goldman Sachs.

The Commerce Department said April sales of retail and food services gained 4% from the year-earlier month. Excluding auto-related spending, the gain was more impressive to economists, at 1.3% over March and 3.7% compared with a year ago.

The news contrasted with last week’s reports by individual retailers of April same-store sales, which had mostly disappointed investors and led some economists to question the health of consumer spending, which accounts for two-thirds of the domestic economy.

Based on those company reports, Goldman Sachs pegged April sales as gaining a scant 0.8% from the same period a year ago, well below the firm’s estimate of 2.8%.

But those tallies were skewed because of an early Easter holiday and because some of the retail industry’s strongest performers--including many home improvement and electronics stores--don’t report individual monthly sales.

The Commerce Department data released Tuesday pegged building material and garden retailers as gaining 5.6% over April 2001 and electronics and appliance sellers as gaining 8.5% over the same period a year earlier.

“There was some concern about a pullback, particularly when April chain store sales numbers came out on top of March data being relatively weak,” said Carl Steidtmann, chief economist with Deloitte & Touche. “But the consumer has been the stalwart of the economy all along.” That consumer strength has benefited discount sellers such as Wal-Mart. Its stock rose $2.35 on Tuesday, closing at $57.39 on the New York Stock Exchange. Shares in Sears gained $2.89 to $54.89 on the NYSE.

Wal-Mart reported first-quarter earnings of $1.65 billion, or 37 cents a share, up 20% from $1.38 billion, or 31 cents, a year earlier and beating by a penny the estimate of analysts polled by Thomson Financial/First Call. Wal-Mart sales jumped 14% to $55 billion.

Net income for J.C. Penney rose to $86 million, or 29 cents a diluted share, from $41 million, or 13 cents, a year earlier.

With first-quarter revenue at its JCPenney stores and Eckerd drugstores up 2.7% to $7.73 billion, the company also raised its full-year earnings guidance to 90 cents to $1 a share, compared with 39 cents last year. Shares in J.C. Penney rose $1.69 to $24.89 on the NYSE.

Off-price retailer TJX, which operates T.J. Maxx and Marshalls, said earnings for the quarter rose 19% from a year earlier to $147.1 million. Sales were $2.67 billion, up 17% from $2.27billion a year earlier. TJX shares rose 68 cents to $21.37 on the NYSE.