Retailers got an early spring break.
Propelled by the warm weather, colorful, fresh spring apparel and accessories, and Easter falling on April 8 this year versus April 24 in 2011, many retailers on Thursday reported high-single-digit or low-double-digit comparable store sales gains for March.
Macy’s rose 7.3 percent; Saks Fifth Avenue was ahead 6.3 percent; Nordstrom was up 8.6 percent; TJX Cos. and Ross Stores both rose 10 percent; and Limited Stores grew 8 percent.
Gap Inc. posted a surprising 8 percent gain, spurred by redesigned assortments and better traffic trends. “We delivered solid sales performance in March and are pleased with customer response to product across all brands,” said Glenn Murphy, Gap’s chairman and chief executive officer. However, the San Francisco-based chain was coming off a low base of volume from March a year ago when comps were down double digits.
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Retail experts said stores would have done well in March even without the benefits of warm weather and the calendar shift. Consumers have been more prone to spending since Christmas and are feeling securer in their jobs this year with the economy and employment slowly improving. At this point, gas prices hovering around an average of $4 a gallon have not hampered spending much.
“There is some underlying strength in the business,” observed Laura Gurski, partner and global head of A.T. Kearney’s retail practice. “We don’t have the big shocking news that would destabilize spending. Even if the weather had not been so nice, we would have expected an uptick, maybe more gradual than it was.”
She expects that April and May will also yield good results, based on trends since Christmas. “In 2010, we had a really strong holiday that did not continue into the first quarter. This year, we had another strong holiday and it did continue. Apparel sales have been very strong.”
“Stores were up against weaker numbers last year, but there is no question they did well in March. Easter is significant and a lot of the business is done at regular price,” said Arnold Aronson, managing director of retail strategy at Kurt Salmon Associates.
Though the economy is improving, “we’re not completely out of the woods,” Aronson said. “There are still issues like gas prices and declining home equity and weakness in Europe and the unknown volatility that could set in. Certainly, a good many stores exceeded plans for March, but we have to wait to see what the give back will be in April.”
“There was strength across all sectors — luxury, midtier and value. March was a sign that the consumer is getting a little bit more confident and that is good for everybody,” said Joel Bines, managing director at AlixPartners’ global retail practice.
But Bines and the other analysts cautioned that March probably took a bite out of April sales, due to the earlier Easter. Ross Stores, for example, sees only a 1 to 2 percent gain for April. And Macy’s, expects the combined increase for the two months to be between 4.3 and 4.5 percent, lower than the March figure but above the 3 to 3.5 percent increase originally forecast.
The analysts also said that soaring gas prices could have a greater impact on shopping in the summer when families go on road trips and buy back-to-school clothes.
The numbers are also distorted by some stores blending their online sales into the comp-store sales, which hikes the results. American Apparel, for example, said it was up 21 percent last March, including online sales.
“March sales exceeded our expectations beyond the benefits we anticipated from an earlier Easter and a shift in a cosmetics event from April last year to March this year,” said Terry J. Lundgren, chairman, president and ceo of Macy’s, which had a 7.3 percent gain in comparable sales, including e-commerce revenues. “Once again, our strength in performance was balanced across Macy’s and Bloomingdale’s, stores and online, geographies and families of business.”
Target Corp. reported 7.3 percent growth, versus an estimate of 5.4 percent, reflecting what Gregg Steinhafel, chairman, president and ceo of the mass merchandiser, described as a “healthy underlying trend” in business to go with the advantageous Easter timing and the weather last month.
One possible factor behind that healthy underlying trend could be how an increasing number of retailers are operating. “They’ve become much more scientific in their approach to inventory management and flow,” Aronson said. “It’s much more analytic and process-driven.”
U.S. retail stocks perked up 0.7 percent on the comp results, but the market continued to slide as economic worries lingered from earlier in the week and investors looked ahead to today’s employment report.
The S&P Retail Index rose 4.19 points to 624.72, as the Dow Jones Industrial Average fell 14.61 points to 13,060.14. Fashion’s gainers included Ross Stores Inc., up 2.5 percent to $59.81; The TJX Cos. Inc., 2.4 percent to $40.29; Lululemon Athletica Inc., 2.3 percent to $77.06, and Ralph Lauren Corp., 2.3 percent to $178.06.