NEW YORK — High gas prices; difficult year-over-year sales comparisons; chilly, wet weather, and an earlier Easter are the forces that tugged and pushed March same-store sales, which may be softer than the strong comps seen in the first two months of the year.
The International Council of Shopping Centers expects March comparable-store sales to show an aggregate increase of 3.5 to 4.5 percent. This forecast is up against a tough comparison: In March 2004, comps gained 7 percent.
Same-store sales, a widely regarded metric that measures sales at stores open at least a year, rose 4.9 percent in February and 3.6 percent in January, according to ICSC data. Most retailers release March comps today.
The impact of higher fuel prices is keeping some retailers up at night. But consumers may be coping. As Nymex crude oil futures hit a record intraday high on Monday, up more than 60 percent year-over-year, the ICSC said recent survey results show American shoppers are dealing with higher gas prices by becoming more efficient shoppers: They are buying the same amount of goods, but making fewer trips to the store.
Fifty-nine percent of households surveyed reported that they have not reduced their spending over the last month on items such as clothing, shoes, jewelry, consumer electronics and beauty services, the survey said.
Michael Niemira, chief economist and director of research at the ICSC, said higher average weekly earnings have helped offset the negative impact gas prices have had on consumer spending. Indeed, Robert W. Baird & Co. analyst J. David Cumberland wrote in a recent research report that “employment among low-income consumers has improved slightly in recent months.”
If last month’s sales results at Wal-Mart Stores Inc. are any indication, however, March comps could have some fire left in them, considering that Wal-Mart’s target demographic is likely one hardest hit due to the higher gas prices. The company said in a recorded call released Saturday that U.S. same-store sales in March rose 4.2 percent, including its Sam’s Club division, the second month in a row that total U.S. comps rose more than 4 percent. In comparison, comps rose 6 percent in March 2004 at U.S. Wal-Mart-owned stores.
Food comps, Wal-Mart said, were stronger in March than those in the general merchandise category. Wal-Mart said, “Due to unseasonable weather, sales for spring seasonal items were below plan.”
Many analysts who released research notes previewing March same-store sales focused on the cool weather that hit most of the country during the month. The weather compares unfavorably with the above-average temperatures in March 2004. Piper Jaffray senior research analyst Jeffrey Klinefelter said the lousy weather “at least partially offset” what was likely a sales benefit from the shift in the Easter holiday, which fell one week earlier this year. Last year, Easter fell in the April sales reporting period.
Klinefelter said teen retailers, such as American Eagle Outfitters Inc. and Abercrombie & Fitch Inc., as opposed to mass merchants and major department store chains, may have been resistant to the poor weather because teens shopped for apparel and accessories to take on spring break vacations.
In addition, more promotions in March could have benefited same-store sales, said Citigroup Smith Barney analyst Kimberly Greenberger in her report previewing March results. “However,” she added, “positive comps could come at the expense of merchandise margins, given the cold, wet weather throughout the Midwest and Northeast.