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Retailers and Investors Look at April Comps in Context of March

Spring has been a roller-coaster ride for many retailers as the shift of Easter sales earlier in the season this year boosted March comps at the expense of April results.

Spring has been a roller-coaster ride for many retailers as the shift of Easter sales earlier in the season this year boosted March comps at the expense of April results.

When stores reported April same-store sales Thursday, retailers and industry observers said the most accurate picture of how the industry fared this spring looked at both March and April because of the holiday shift.

“If you just looked at sales figures versus a year ago, [April] seems reasonably disastrous, but if you add together March and April, you’ll see it’s a pretty normal trend,” said Donald Soares, principal in CapGemini’s retail practice.

The average same-store sales figures for the three sectors tracked by WWD changed significantly when the monthly figures were averaged. Department stores’ average same-store sales for the two months increased 2 percent, versus a decline of 4.7 percent in April and a gain of 8.6 percent in March. Mass merchants posted an average comps gain of 1.5 percent for the combined period versus a decline in April of 3.6 percent and an increase in March of 6.6 percent.

Specialty stores struggled by comparison this spring, posting average same-store sales for the two-month period of negative 0.3 percent. The figure is still better than the 7.8 percent average decline reported in April. March comps were up 7.1 percent for the sector.

“The more important story is the trend over the last two months or even the last three months. Over the last three months, for example, year-over-year comp-store sales growth averaged 2 percent per month, which is exactly half of the pace the industry experienced during the same period in 2006,” Michael Niemira, chief economist and director of research, International Council of Shopping Centers, said in a release.

On a two-month basis, apparel did pretty well, said Deborah Weinswig, managing director and retail analyst, Citigroup. Despite industry speculation that April’s gloomy figures were an indicator of something larger at play than just weather and holiday trends, Weinswig said she didn’t see anything to be concerned about in consumer spending just yet. “A lot of retailers misread Easter,” Weinswig said, which lead to shock in March and disappointment in April.

“If you average March and April you get the underlying run rate of the business without the swing of Easter,” said Howard Tubin, director of equity research, RBC Capital Markets. For some companies the combined March/April period showed improvement on both a year-over-year and a two-year basis compared to February, he said, which indicates that business are doing fine.

Investors showed their displeasure with April’s results as retail stocks tumbled initially on Thursday in response to the large number of companies that missed their own and analysts’ expectations for same-store sales figures. The Dow Jones Industrial Average shed nearly 150 points. Some analysts said investors overreacted or took some profits. Either way, stocks recouped most of the losses on Friday.

The retailers in the specialty sector showed mixed results for the two-month average. American Eagle recovered some, showing a 5 percent average gain for the two months. The retailer’s April comps had a 10 percent decline. Abercrombie & Fitch had a negative 4 percent average comp for the two-month period. In April, the company’s same-store sales were down 15 percent.

Aéropostale’s average same-store sales for March and April gained 1 percent on average, while in April the retailer had a 14 percent decline. The company was one of the few that also released a combined comps number.

“While our results for [April] reflect the negative effect from the shift in Easter, we remain very pleased with our performance for the first quarter, particularly the combined March and April period in which we generated a 2.6 percent comparable-store sales increase,” Julian Geiger, chairman and chief executive officer, Aéropostale, said in a statement.

Within the department store sector, the luxury stores were still the top spring performers. Saks’ average same-store sale growth for March and April was 10.9 percent, Nordstrom’s was a 9.1 percent and Neiman Marcus’ was 5.6 overall.

Federated broke even for the two-month period, with flat same-store sales. Kohl’s, J.C. Penney and Gottschalks posted average gains of 3.2 percent, 3 percent, and 2.8 percent, respectively for March and April.

Mass merchants fared reasonably well also. Target’s average comps growth for the two-month period was 3 percent and TJX Cos.’ was 2.5 percent. Wal-Mart’s two-month average still represented a decline; comps were down 0.6 percent on average for March and April. Costco and BJ’s reported combined comparable-store averages of 5.5 percent and 3.4 percent, respectively.