March same-store sales went out like a lion because of an early Easter.
Sales leading up to the holiday last Sunday were counted in March results. Consumers ready to switch to a new season also bolstered volume. As a result, many companies exceeded industry expectations.
Analysts and individual retailers cautioned, however, that the boost could come at the expense of April numbers.
Overall, apparel retailers reported overwhelmingly positive results. Of the 49 companies tracked by WWD, 44 showed same-store sales gains, two were flat and two declined. Department stores increased an average of 7.9 percent, specialty stores increased 7.1 percent and mass merchants were up 6.6 percent.
"Easter supercharged excitement about the new season," said Patricia Walker, partner in the retail practice at Accenture, a consulting firm.
March results seemed to surprise the analyst community, which is unusual, she said. Easter had a far more positive impact on the month than many predicted. The true measure of the spring selling season, however, will be the combined results of March and April, Walker cautioned.
Richard Jaffe, an analyst with Stifel Nicolaus, predicted that Easter would move approximately 3 percent of sales out of April and into March, in a note released before the bulk of retailers had reported.
"Overall comp-store sales were much better than expected in March as a result of the Easter calendar shift and warmer weather in some parts of the country," said Michael Niemira, chief economist, International Council of Shopping Centers. "Though chain store sales were strong in March, April faces a much harder comparison due to the lack of a sales driver and projections of unseasonably colder than normal weather throughout the month."
Chain store sales increased 5.9 percent, according to ICSC data, the strongest sales increase since last April, when sales grew by 6.7 percent. March sales exceeded expectations that they would increase by 4 to 5 percent.
Weather patterns during the month were erratic, although some retailers attributed their performance to warmer-than-average temperatures in some regions. March was the warmest it's been in decades, but cold temperatures in the eastern U.S. during Easter week and earlier in the month offset the positives during some of the month. The most positive results were seen in areas of the Midwest and on the West Coast, where temperatures were warmer than normal."While March weather overall was extremely favorable, the extreme cold and snow in the key Northeast and Midwest markets during the critical Easter shopping week resulted in very difficult selling conditions against a very favorable selling environment last year. For some regional retailers, the frigid Easter weather will have trumped the holiday," said Paul Walsh, senior vice president at Planalytics, a weather-based business intelligence firm.
Among the companies positioned favorably to benefit from weather-driven demand, according to Planalytics, were Nordstrom, Gottschalks and Costco. Bon-Ton and BJ's Warehouse were positioned the least favorably on the Planalytics index.
"It looks like an earlier Easter and strong job gains helped overcome the impact of Jekyll-and-Hyde weather and an upswing in gasoline prices," Frank Badillo, director of Retail Forward KnowledgeBase and senior economist for TNS Retail Forward, said in a statement.
Retailers with innovative spring merchandise benefited from any other boons they were given in March, said Priscilla Donegan, global marketing leader of retail for Capgemini.
"Retailers themselves are putting their focus on innovation that can have a positive impact," she said. "They are simultaneously focused on innovation as opposed to just increasing efficiencies or cost-cutting." Many retailers over the last few years have focused on improving technology and other infrastructure, she said, and now they are poised to bring innovation into their merchandise mix, which consumers have responded to.
In the department store channel, most retailers reported double-digit growth year-over-year. Luxury department stores continued to lead the pack: Nordstrom was up 15 percent, Neiman Marcus gained 10.2 percent and Saks increased 10.1 percent.
They weren't the only ones to shine. Comps at Kohl's increased 16.8 percent. Kohl's attributed its strong performance to spring apparel categories like shorts, T-shirts, tanks, dresses and swimwear. J.C. Penney and Stage Stores reported 10.6 percent and 12.4 percent increases, respectively. Only Bon-Ton reported a same-store sales slide, declining 3.8 percent.
Federated reported a same-store sales increase of 2.3 percent, just short of expectations. The company blamed the miss on categories outside apparel.
"March sales fell just short of our expectations in most regions across the country, largely attributable to weakness in home-related merchandise categories," said Terry Lundgren, chairman, president and chief executive officer of Federated. "Unseasonably cold weather as new spring merchandise flowed into the stores in the pre-Easter period also contributed to disappointing sales in the month."Most specialty stores reported positive same-store sales growth. Gap Inc. posted positive comps at all three of its divisions, for the first time in a few years. Gap was up 4 percent, Banana Republic climbed 8 percent and Old Navy increased 10 percent.
"Our comparable-store sales improvement in March was driven primarily by customers shopping the week before Easter," said Sabrina Simmons, senior vice president of corporate finance at Gap Inc. "While our performance also benefited from spring clearance at Gap and Banana Republic, it resulted in merchandise margins that were below last year."
American Eagle reported a 20 percent increase, well above the consensus prediction of a 10 percent gain. The company's success stemmed from its marketing campaign and merchandise that rings true with consumers, Jennifer Black of Jennifer Black Associates said in a research note. The company is poised to continue to gain market share, she said.
Aéropostale delivered a 15.9 percent gain. The company pointed to its spring merchandise assortment as the driver of its March sales increase.
Zumiez also significantly beat analyst expectations, reporting a 17 percent increase in same-store sales. The consensus forecast was 9.8 percent. The company was up against a tough comparison of 14.3 percent for the same period a year ago.
"Zumiez is a key destination for young male/female board-inspired shoppers," Black said, adding that the company is poised to maintain that position.
The mass merchant sector also fared well. Target dominated the sector with a 12 percent increase in monthly same-store sales, which the company said was in line with expectations. The company also said it still expected same-store sales numbers for the combined March/April period to increase from 4 percent to 6 percent overall.
Wal-Mart's discount stores reported an increase of 3.4 percent, better than expected and higher than its numbers for the last few months. Stein Mart and Ross Stores were up 8 percent and 6 percent, respectively.
TJX Cos. exceeded its previously released expectations and reported a 6 percent increase in comps.
"Virtually all of our divisions achieved above-plan comparable-store sales increases. Looking forward, we continue to have great liquidity in our inventories and are well positioned to take advantage of market opportunities," said Carol Meyrowitz, president and chief executive officer of TJX Cos.Analysts and retailers said retailers needed to keep the focus on innovative, seasonal merchandise. As the weather gets warmer, most expect continued enthusiasm from consumers to buy for the new season.
"The key to delivering in April is keeping things fresh. Retailers got them there in March, which is great news, but they have to try to keep them there," said Accenture's Walker.
It remains to be seen what impact the shift of Easter will have next month. April results will be the true test of the significance of the holiday on spring results.
"For April, we expect comp-store sales to be flat to up 1 percent, on a year-over-year basis," said ICSC's Niemira.
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