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Euphoria about the strength of April’s same-store sales results might prove to be a tad premature.

This story first appeared in the May 6, 2011 issue of WWD. Subscribe Today.

With skyrocketing gas prices, rising food costs and the certainty of higher prices for apparel this fall because of higher cotton costs, the results reported Thursday could be the calm before the storm, analysts said, as the industry braces for stiffer headwinds and faces better year-ago comparable-store sales in the months ahead.

“April may look good, but do not consider April part of a favorable trend going forward,” said David Bassuk, head of the global retail practice at AlixPartners. “The summer months are going to be a painful story.”

According to the International Council of Shopping Centers, April comps rose more than expected, 8.5 percent over last year, making it the strongest month since March 2010’s 9 percent increase.

But with retailers raising prices 17 percent on average and with those price hikes taking their firmest hold in July and August, consumers are likely to pull back on spending and wait for promotions, Bassuk said.

“Retailers are going to try to hold out like they do at Christmas,” he said, but shoppers have “been trained to wait” for the steepest markdowns. “It will be a bloodbath of promotions.”

Steep promotions equal margin deterioration, said Bassuk, who added that much of the “pain” to come will be felt by midtier retailers, which will be forced to push harder to offer fashion at an enticing price.

Calling the year “turbulent,” the consultant, who expects 2011 retail sales to be flat to up in the low-single digits, said there will be a “shakeout” in the back half, which will translate to an increase in store closures, a greater number of distressed companies and more mergers and acquisitions.

That aside, other retail experts preferred to look at April as more than just a blip. Yes, a late Easter shift and competitive promotions propelled monthly results, said Barbara Kahn, director of the Jay H. Baker Retailing Center at the Wharton School of the University of Pennsylvania, but there’s also pent-up demand and fashion newness that’s driving consumer spending. Consumers are spending “across the board,” she said, pointing to midtier retailers like Macy’s Inc., J.C. Penney Co. Inc. and Kohl’s Corp., which are reaping the benefits of their “innovative” merchandising efforts.

“Retailers are really customer-focused,” Kahn said, referencing Macy’s localization initiative, My Macy’s, as well as a host of celebrity and designer launches at midtier department stores.

Despite her upbeat outlook, Kahn admitted there are some “wild cards” at play, such as possible ramifications relating to Osama bin Laden’s death, that could trip up the momentum.

“It feels like there’s some risk of a slowdown,” agreed Morgan Stanley retail analyst Kimberly Greenberger. “May, June and July comp comparisons are easier, but the spike in gas prices and food inflation are worrisome.”

Retail stocks also “feel a little tired,” and have nowhere to go but “down,” she said, stressing that she’s concerned about a continued “price war” among specialty retailers.

Still, retail stocks held their own on Thursday, with the S&P Retail Index dipping less than 0.1 percent, to 539.89, even as the Dow Jones Industrial Average, reacting to declines in commodities, suffered a 1.1 percent contraction to 12,584.17.

While feverish price competition is most apparent at Abercrombie & Fitch Co.’s Hollister division and the badly bruised Aéropostale Inc., it affects all mall-based chains fighting for consumer dollars. Central to winning the customer is offering the right fashion at the best price, something that Gap Inc.’s namesake brand and Banana Republic chain are struggling to accomplish, Greenberger said.

“When I walk into a Banana, I am not inspired,” she said. “For their [higher] price point, they need to knock their customer out.”

Limited Brand Inc.’s Victoria’s Secret, with its 25 percent comp increase, is indeed knocking its customer out.

“There’s an increase in trends in color and sheerness in fashion that are translating very well at Victoria’s Secret,” she said, noting that women are pairing brightly colored bras under sheer tops. “Victoria’s Secret has made an interesting, fun and engaging shopping experience. No one executes better in the mall.”

“Consumers are buying items that are not necessarily on sale, and that’s been a big difference” between this year and last, according to Sherif Mityas, a partner in A.T. Kearney’s retail consulting practice. “It’s more about merchandise this spring.”

Despite headwinds like high unemployment and static housing and credit markets, Mityas expects 4 to 5 percent growth in 2011, and sees general improvement for retailers, but not without a caveat.

“The big question mark is commodity costs and how they will affect back-to-school and holiday,” he said. “It’s the thing keeping retailers up at night.”

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