NEW YORK — The Easter Bunny’s later arrival this year made April the best-performing same-store sales month in two years — especially for teen retailers, who posted the strongest gains.
With a 6.6 percent aggregate sales jump, April was the best comps month for retailers since March 2004, according to the International Council of Shopping Centers. Last month, by comparison, comps rose 1.9 percent, which was the weakest increase since November 2004.
Of the 50 retailers tracked by WWD, 44 had positive April comps; only six registered negative results.
Specialty apparel retailers posted the biggest aggregate increase of 9.4 percent, while mass merchants and department store chains delivered gains of 5.8 percent and 6.1 percent, respectively.
In April, warmer weather and the so-called “Easter shift” — sales moved into April from March mainly because the holiday and school spring vacations fell three weeks later this year than last year — brought retailers high traffic levels and higher-than-expected same-store sales. April’s strong sales allowed many retailers to lift first-quarter earnings forecasts.
Specialty retailers focusing on the teen category, such as American Eagle Outfitters Inc., Wet Seal Inc., Citi Trends Inc. and Pacific Sunwear of California Inc., benefited the most from the holiday shift, posting sales increases in the double digits. American Eagle’s comps rose 19 percent, while Wet Seal had a 17 percent increase and Citi Trends a 47.5 percent comp surge. PacSun’s comps rose 14 percent.
In the high-end department store segment, April comps were robust for the Neiman Marcus Group and Nordstrom Inc., which had gains of 9.5 and 7.3 percent, respectively. Saks Fifth Avenue’s comps rose 0.8 percent while the Saks Department Store Group’s gained 8.6 percent.
Moderate department store chains Kohl’s Corp. and Dillard’s Inc. blew away analysts’ estimates with 13.4 percent and 10 percent comps surges, respectively. Federated Department Stores Inc. reported a 0.8 percent decline in comps, slightly better than estimates of a 1.7 percent decline. Stage Stores had the best comps in the channel with a gain of 16.9 percent.
There were strong showings from mass merchants Target Corp. and Wal-Mart’s U.S. division, which had respective 10.4 percent and 6.8 percent increases in April comps.
Donald Soares, principal in the consumer products and retail practice at consultant Capgemini, attributed the general sales surge in April not only to the later Easter but also to the strong U.S. economy.
“The economy is just doing extremely well despite gas prices rising and [concern over higher] interest rates. Unemployment is at 4.7 percent, wages are rising and consumer confidence is up because productivity is rising, too,” Soares said.
Wal-Mart chief financial officer Tom Schoewe said in a written statement Thursday that rising “fuel costs were overshadowed by the customer’s response to merchandise and apparel for the entire family and consumables.” Toys, “from traditional items like dolls, balls and outdoor toys to electronics,” showed strength in April, too, Schoewe added.
Soares said April sales were a question of “the ability to execute. The stores that executed really well were able to capture sales growth.” He cited Nordstrom, Abercrombie & Fitch Co., with a 17 percent advance, and Target as stores that have executed merchandise trends successfully.
Abercrombie has “kept prices high and they’ve kept to their format — a slight sexy, edgy appeal for young adults — and they maintained that as the economy has picked up,” Soares said.
Abercrombie said in a recorded call that shorts, pants, knit tops and fleece were strongest in women’s at adult Abercrombie stores.
Soares said Target has “done well because it’s able to elevate new brands, things like Mossimo, versus Wal-Mart. It’s at times difficult to shop at Wal-Mart. Target has been able to maintain excitement within its stores.”
Patricia Walker, a partner in the retail practice at consultant Accenture Ltd., agreed that retailers that focused on clutter-free stores combined with strong merchandise offerings, such as Target and Kohl’s, had strong comps. Stores that “got their Easter product out there early and removed clutter were able to put a compelling proposition out there for the customers,” which subsequently drove sales “to the high end of comps versus the middle range,” Walker said.
Kohl’s management said on a recorded call, “April clearly benefited from the shift of Easter and the break of warm weather in many regions.” Knit tops, skirts, shorts, capris and swimwear had strong comps in the month.
At specialty retailer American Eagle, sales of women’s tank tops, shorts, jeans and intimates led to stronger-than-expected April comps of 19 percent, which were ahead of analysts’ estimates of 9.7 percent. Shopping the week before Easter was strongest as core customers picked up last-minute items for spring vacations.
“We really felt good about the performance of April, particularly the broad-based strength of our assortment. It’s really a balanced lifestyle assortment. The response from the customer, we were very pleased with,” Joan Hilson, chief financial officer of American Eagle, said in an interview with WWD. She added that the retailer’s new, tiered pricing assortment structure has been “very successful.”
“We’re adding some incremental price points on the higher end, giving the customer a stronger quality-value equation,” Hilson said, adding that the tiered price structure is one of the company’s major strategies. It has so far involved higher prices on some denim and knits.
Thanks to the strong April, American Eagle upped its first-quarter earnings-per-share outlook to 40 to 41 cents from a prior estimate of 36 to 38 cents. Analysts’ consensus is for a profit of 38 cents. The company will report May 16.
Another firm with strong April comps was Limited Brands Inc., where consolidated comps rose 9 percent. By division: Victoria’s Secret stores had a 12 percent rise, Bath & Body Works had an 8 percent gain and Express came in with a 6 percent advance. Limited Brands said on a recorded call that Bath & Body Works unveiled a catalogue during April, and Victoria’s Secret’s launch of the Very Sexy Infinity Edge Push-Up “was above expectations.”
On the downside, Chico’s FAS Inc. missed analysts’ estimates for a 8.1 percent increase, turning in a 5.4 percent gain in April comps. Scott Edmonds, president and chief executive officer, said in a written statement that the company was “somewhat disappointed” with April sales.
“While our low-single-digit positive same-store sales for Chico’s may seem acceptable after nine consecutive years of double-digit increases, we certainly think we can do better,” Edmonds said, adding that the company has identified several merchandise misses. “We probably needed more color, certain additional novelty products and some specifically targeted offerings for our Chico’s brand cold-weather stores.”
The company guided first-quarter EPS to between 28 cents and 29 cents, below analysts’ estimates of 30 cents. Shares of Chico’s fell 19.1 percent to $30 Thursday in New York Stock Exchange trading.
Elsewhere in the specialty space, Talbots Inc., which posted a much higher-than-anticipated 10.8 percent comp increase, said that with its recently completed acquisition of J. Jill, and in accordance with a growing trend for multibrand retailers, it will no longer issue monthly same-store sales.
Talbots said the month benefited from strong sales of shorts, skirts and knits.
Looking to May, Soares feels “very positive” so far about the month’s same-store sales. He cited the consumer’s proven ability to overcome high gas prices, as well as the continued strong housing market as positively affecting spending.
Walker also feels optimistic because a strong product cycle is clearly “counteracting the fuel price dilemma” by convincing shoppers to dole out discretionary income. “The whole market is getting better tuned with what people are wanting. It’s a good indication for what’s going to happen in the next season,” she said.