By  on May 5, 2010

April showers, combined with a detrimental calendar shift, will likely spell weak comparable-store sales results for retailers on Thursday, but the challenging month isn’t expected to damage the solid condition of retailing’s first quarter, according to analysts.

However, the just-concluded quarter may be a hard act to follow as the summer months approach.

April was the flip side of March, which benefited not only from warm weather but also an early Easter that pulled more high-traffic shopping days into the earlier month. The unseasonably chilly weather last month, the last of the first quarter, might have impacted sales more than originally expected

“Due to the shift in the Easter holiday, March stole a good chunk of April sales,” said Thomson Reuters analyst Jharonne Martis, who added that it’s “essential” to look at March and April together in order to get a “smoother representation” of the current state of retailing.

“Increasing personal income, improved unemployment and the release of pent-up consumer demand are creating a supportive backdrop,” said Martis, who estimated April comps should be up 1.6 percent.

On the other hand, the International Council of Shopping Centers, which reported March comps advanced 9 percent, expects last month’s to come in “flat to down slightly.” Although he detected a slowdown at the end of the month, Michael Niemira, ICSC director of research and chief economist, said customer traffic continues to build for discounters and department and apparel stores.

“Overall the pace of spending was somewhat more subdued this past week than in recent weeks,” he said.

Retailers experienced a slight sales decrease at month’s end after six consecutive weeks of gains, Niemira said, explaining that for the week ending May 1, weekly sales slipped 0.4 percent. Sales “retained a healthy pace of 4.4 percent” on a year-over-year basis, however.

“April was a mixed bag. This was particularly true in apparel,” said Mike Berry, director of industry research for MasterCard Advisors SpendingPulse.

SpendingPulse, an information service provided by MasterCard Advisors that estimates total U.S. retail sales by cash, check or credit card, said apparel sales were down 3.9 percent in April, following a 5.2 percent increase in March.

Last month, men’s apparel sales slid 0.5 percent, somewhat offsetting a 4.1 percent decline in woman’s apparel. Luxury grew for the third consecutive month, soaring 15.5 percent after a 19 percent increase in March. Sales at department stores fell 9.1 percent in April, following a 3.2 percent decline in March. Berry, who called the results “rather disappointing,” said they were dragged down by low- to midtier stores.

“These are the first numbers we’ve seen in a while that haven’t built on the momentum from holiday sales,” Berry said, noting the “lumpiness” in spending may be linked to the recent increase in car sales, and the subsequent first payments which are due 30 to 45 days after purchase.

Howard Tubin, retail analyst at RBC Capital Markets said that overall, “April’s weakness is the result of cool and damp weather.”

“Once it warms up, business will likely pick up,” he said. “We believe the consumer’s renewed interest in fashion continues and there is ample new and updated product out there to drive traffic and inspire purchases.”

Aside from the weather, Lazard Capital Markets retail analyst Todd Slater pinpointed a possible consumer “hangover” from the “strong spending trends seen in February and March.” He expects the combination of March and April will yield an increase of 7.2 percent.

Slater acknowledged there are “no real catalysts until back-to-school” and that retail stocks “feel a bit toppy” based on increases this year, but he still sees room for upward earnings revisions.

“If the fashion trends remain equally compelling, comp-store sales appear sustainable above the 5 percent level, while low inventory should continue to bode well for margins, meaning that consensus earnings estimates still have room for upside revisions,” he said.

Susquehanna Financial Group analyst Thomas Filandro said that, with the “shopping impetus of Easter and school spring breaks behind the sector,” retail stocks “will run into near-term headwinds as we enter the commodity selling season.

“Although we do believe the consumer recovery is in full swing, we see the next two to three months as more difficult price appreciation potential periods for specialty retail apparel and accessories players, which suggests a higher volatility period as we approach the important back-to-school selling season in mid-July,” he said.

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