NEW YORK — Stores lost the battle for consumers’ attention in March.

They certainly had enough competition. Deprived of Easter revenues by the calendar and of the public’s interest by war worries, wintry weather and a lack of must-have items, apparel retailers limped across the finish line in March with few positive same-store results and more than a few double-digit declines.

This story first appeared in the April 11, 2003 issue of WWD. Subscribe Today.

Even in Easter-deprived condition, a number of stores — Gap, Pacific Sunwear and Chico’s notable among them — outperformed the competition and delivered solid results. However, only 11 of 50 companies surveyed by WWD managed to deliver increases.

“There are some stores that are gaining,” said Russ Jones, a retail consultant, “showing people are willing to spend if the retailer is doing the things to appeal to its customers, but those who have nothing other than price to offer are not performing well.”

Overall, the Goldman Sachs comparable-store sales index for March fell 0.5 percent, slightly better than the 0.8 percent expected, but far worse than the 5.6 percent comp gain of March 2002. Weakened by a meager 0.3 percent gain at Wal-Mart’s discount stores and a 1.3 percent drop at Target’s, discounters were up just 1.5 percent versus the 1.2 percent projected. Specialty stores declined 1 percent and department stores came out worst of all with a 5.3 percent comp drop.

There was little consolation in the fact that results in some cases exceeded forecasts. Daniel Barry, a broadline retailing analyst with Merrill Lynch, said comps in his world of 67 retailers fell 3.1 percent, the worst performance since September 2001, when comps declined 3.3 percent. Barry said he blamed the weak results on difficult comparisons with last year, when people stopped traveling in the wake of 9/11 but continued shopping.

Even with the expectations of Easter revenues in April, most stores were cautious about April, which has gotten off to a slow start due to the focus on the Iraqi war and more inclement weather. With two months of the first quarter down and one to go, some retailers — including Target, J.C. Penney and Talbots — scaled back quarterly expectations.

“There are still a lot of expectations going into April because sales in March were weaker, especially for some of the teen retailers,” said Dana Telsey, a retail analyst with Bear Stearns.

Marcia Aaron, a specialty retail analyst with Pacific Growth Equities, noted the wide gulf separating the best-performing retailers, like Pacific Sunwear’s Demo division (up 35.1 percent), and the weakest, like Wet Seal (down 27.1 percent).

“The changes in where consumers are shopping depend on who improved their assortments,” she said. “I don’t think consumers are shopping with a vengeance. We need to have things settled, like a strong economy, to return to robust results.” She characterized results since July as “anemic.”

On the other hand, Accenture’s Steve Skinner said the overall picture is not as bleak. “There was just so much noise out there” in March, he said. “The silver lining in this dark cloud will become more apparent as the noise of the war and higher oil prices begin to recede from the scene. Corporations will be able to make better decision and will unleash renewed investment in the marketplace.”


Gap Inc. in March managed a 9 percent comp increase, its sixth straight up month, as Old Navy advanced 17 percent and Gap 6 percent, more than covering Banana Republic’s 5 percent decline. “Overall merchandise margins improved over the prior year due to more regular-price selling and higher markdown margins,” the company said on a prerecorded call.

Higher conversion rates and average retail tickets at both Gap and Old Navy helped compensate for declines in traffic.

At Limited Brands, comps fell 4 percent, reflecting the shift of sales into April, due to the later timing of Easter. All divisions saw comp declines, but only Express, down 3 percent, exceeded expectations. Women’s sales were above expectations, due to additional markdowns.

Limited comps were down 5 percent, while those at Victoria’s Secret and Bath & Body Works fell 2 and 10 percent, respectively.

Continuing to ride the wave of strong sales, Pacific Sunwear of California said comps rose 9.5 percent in March with PacSun stores up 6.8 percent and Demo up 35.1 percent. The firm raised its first-quarter earnings expectations to 14 cents a diluted share, above the most recent consensus estimate of 12 cents. Female apparel and accessories comped up at a double-digit pace and footwear at a high-single-digit clip, while male apparel was down in the low-single digits.

Few teen retailers shared PacSun’s success last month and the timing of Easter was often cited for shortfalls. “Comp sales were only negative during the fourth week of March, which last year was the week leading up to Easter and the peak week of the quarter,” commented Betsy McLaughlin, president and chief executive officer of Hot Topic, which, as reported, endured a rare comp drop of 3.1 percent.

After progressing 3 percent in February, Abercrombie & Fitch’s comps retreated 10 percent in March, but the firm did report a decrease in promotional activity as it held to its first-quarter earnings guidance of 25 cents a share.

Meanwhile, Wet Seal faced hurdles greater than the Easter shift as it posted a 27.1 percent comp decline, better than the 31.5 percent decrease logged in February.

Checking in with a 14.7 percent comp drop, Gadzooks warned that, due to below-plan results during February and March and the pending clearance of all men’s merchandise, it now expects to report a loss of 30 to 40 cents a diluted share for the first quarter ending May 3.

Shrugging off the month’s many mitigating factors, Chico’s FAS said comps rose 12.4 percent in March and reiterated its first-quarter earnings estimates of 27 to 28 cents.

Talbots saw its comps increase 0.8 percent, better than expected. However, it said continued uncertainty and low levels of markdown inventory have led to caution about April comps and a lowering of first-quarter EPS guidance to 48 to 51 cents, versus 57 cents in the comparable quarter last year.

Elsewhere in the misses’ world, Ann Taylor said its comps dropped 8.2 percent, with AT stores down 9.2 percent and The Loft down 6.4 percent. Charming Shoppes fell 6 percent, with Lane Bryant and Fashion Bug stores’ 9 and 4 percent drops, respective, partially offset by Catherines’ 1 percent increase.


For department stores, March was a procession of declining same-store sales, interrupted only by Kohl’s Corp.’s uncharacteristically minute 0.4 percent advance.

The May Department Stores Co., parent of Lord & Taylor and Kaufmann’s, among others, registered an 11.4 percent same-store decrease for the month.

Federated Department Stores Inc.’s comparable-store sales dipped 6.5 percent last month. However, the parent of Macy’s and Bloomingdale’s maintained its first-quarter profit guidance of 14 to 19 cents a share, even though April sales are now expected to be lower than previously projected.

With its 5.5 percent comp retreat below plan, J.C. Penney Co. Inc. pulled down its first-quarter earnings expectations to 18 to 23 cents a share, versus 29 cents in year-ago period. Earlier in the quarter, profits were pegged to be in the low-30-cent range.

Thanks to a stronger showing in its home improvement category, Sears, Roebuck & Co.’s 3.1 percent comp drop was better than expected. The firm’s full-line stores comped down by a percentage in the mid-single digits, while softlines were down by low-double digits for the month. Women’s same-store sales slid by high-single digits, while men’s were down in the mid-single digits. April same-store sales are slated for a mid-single-digit drop, which would make it the firm’s 20th consecutive monthly drop.

Comps at Dillard’s Inc. decreased 12 percent in March. Saks Inc.’s total same-store sales slid 3.8 percent, including a 0.2 percent dip at its department store group and an 8.6 percent fall at Saks Fifth Avenue.

The Neiman Marcus Group Inc. posted a 0.5 percent comp drop, while Nordstrom Inc.’s same-store sales were down 1.7 percent.

Declines also defined the regional department stores in March, with The Elder-Beerman Stores Corp. down 2.9 percent, Gottschalks Inc. off 6.4 percent and The Bon-Ton Stores Inc. down 8.4 percent. Stage Stores Inc. endured a 15.6 percent comp drop, which prompted a reduction in first-quarter earnings projections to a range of $13.8 million to $14.6 million. Previously, the firm said income could go as high as $16.5 million.


Even retailers with broad product assortments, high value quotients and wide customer bases struggled against the calendar, war and economy last month.

Wal-Mart Stores Inc.’s total U.S. comparable-store sales rose 0.7 percent with a 0.3 percent increase at its namesake division and a 2.6 percent advance at Sam’s Club. The overall result came in below the firm’s plan for an increase in the low-single-digit range.

“Spring seasonal merchandise experienced good sales when temperatures were warm,” noted a spokeswoman on a recorded call. “However, unseasonably cool temperatures during portions of the month negatively impacted sales.”

The “CNN effect,” in which shoppers sit in front of their televisions hypnotized by war coverage, was also blamed.

Some warm-weather goods were selling, though, with swimwear outperforming the divisional average at Wal-Mart’s discount stores last month. Intimate apparel was also ahead of the curve.

In April, Wal-Mart is looking for its U.S. comps to rise by 5 to 7 percent.

Target Corp.’s overall same-store sales slid 2.3 percent for the month with a 1.3 percent slide at its discount division pulled down further by an 8 percent drop at Mervyn’s and a 6.1 percent compression at Marshall Field’s.

“Sales for the corporation continued to be somewhat below plan in March,” noted chairman and chief executive Bob Ulrich, in a statement. “In light of our actual sales performance in February and March, and our outlook for April, we are unlikely to fully achieve our profit plan in the first quarter.” Total comps slid 1.4 percent in February.

Wall Street had the firm pegged for earnings of 40 cents a share in the first quarter.

In April, the Target division is looking for a comp upswing of 4 to 6 percent, with the firm’s overall result trailing the lead division by 1 percentage point.

Other decliners in the realm of value retailing included TJX Cos. Inc. (down 2 percent), Ross Stores Inc. (5 percent), ShopKo Stores Inc. (8.4 percent), Value City Department Stores Inc. (4.4 percent) and Factory 2-U Stores Inc. (15.3 percent). Stein Mart Inc. said comps fell 12.9 percent in March and that earnings per share in the first quarter would range from 7 to 9 cents.

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