Byline: Valerie Seckler

NEW YORK — The Easter holiday gave a spring-like assist to March business at discount stores, even as it left their department store cousins out in the cold, Wall Street analysts said Tuesday.
Women’s apparel, however, continued to lag behind the overall sales pace at many mass chains last month, industry members and observers noted. Most retailers are expected to report March sales results on April 10.
The analysts, who track comparable-store sales of the nation’s biggest retailers each week, expect that the discount sector will have logged a slightly above-plan March, lifted by strong sales of seasonal general merchandise. Bestsellers included Easter items, house plants and garden goods.
Kmart Corp. said women’s apparel continued to disappoint, adding that it may log a double-digit comp-store hop only because the early Easter is part of March results. Excluding the effect of the holiday on Kmart’s comps, analysts estimated the discounter will notch a 7.5 percent gain for the month.
“Women’s has been softer than we’d like. It’s the one cylinder that wasn’t firing last month,” conceded Robert Burton, director of investor relations at Kmart.
“We’re confident we can fix that. We have private label brands like Jaclyn Smith, Kathy Ireland and Route 66 that we can build successfully, if we do a better job of executing our buying, sourcing, pricing and visual merchandising,” Burton contended.
Richard L. Church, retail analyst at Smith Barney Inc., said apparel business at Wal-Mart Stores “was somewhat spotty in March, but they had an extraordinarily good pickup in comps, and margins were good.”
Analysts estimated Tuesday that Wal-Mart will ring up comp-store gains of 7 percent, the high end of its plan, and that Target will be up around 4 percent. Officials from the two discounters declined to comment on March business.
“How apparel does at mass in coming months will depend on the psychology of the consumer and the strength of the economy,” Church continued. “If the economy slows down a bit and consumers pull in the reins, apparel business should come back at the discounters.
“For now, the consumer still seems inclined to spend some money, we’re in a strong branded-goods cycle and the discounters just don’t have the brands to spark apparel business.”
Kmart’s March business was better in men’s and children’s apparel and soft home goods such as linens and towels, said Burton, who added that demand for the recently introduced Martha Stewart home line was “through the roof.” Easter merchandise and other seasonal goods did well at Kmart, as they did at other discounters, he added.
Kmart’s March period ends today, compared with retailers that ended their month last Saturday, exaggerating the early Easter’s effect on the chain.
“We’re at a mid-single-digit comp-store plan for the year,” Burton offered. “I think we’ll perform above the industry average for March and below it for April.”
Kmart will average an uptick of around 5 percent for the two-month period, Burton estimated.
Because the mass chains get a chunk of their business from general merchandise, they are better positioned to squeeze an increase out of holiday selling than department stores, which are more focused on apparel, according to retail observers.
Analysts pointed out that Easter is no longer a dress-up holiday in most parts of the country, so the event no longer gives a big boost to department store business.
Nonetheless, moderate-price department store Sears, Roebuck will hit the top end of its 4 to 6 percent plan, forecast Schroder and Smith Barney. J.C. Penney is tracking flat against planned growth of 6 to 8 percent, they said.
According to the Schroder survey, last week’s business at Penney’s was strongest in children’s apparel, followed by women’s, men’s and home. Apparel sales speeded up at Sears last week, which Schroder attributed in part to Easter business.
“Penney has been straddling two price ranges — better and moderate — sending a blurred marketing message to consumers,” said Smith Barney’s Church. “They’re up against too much new footage for Sears, whose apparel business continues to be very strong.”
Also benefiting Sears, said Church, are “good, on-target ads” and the strength of its hard-line brands, such as Craftsmen and Kenmore.
“Sears has a great franchise with its customers, who believe they will find good values there,” the analyst noted. “J.C. Penney is playing catch-up — even their new commercials sound like Sears’.”

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