LATE EASTER CHILLS MARCH

Byline: Thomas J. Ryan

NEW YORK — The late Easter, as expected, produced gruesome March sales, but retailers and Wall Street analysts said resilient consumer spending should lead to a resounding rebound in April.
Most retailers posted declining same-store sales — some of them unsightly double-digit ones — as the shift in Easter to April 23 from April 4 last year pushed much of spring selling into April, particularly for those with a heavy mix of children’s apparel and dresses. Indeed, Credit Suisse First Boston’s softline’s same-store sales index was down 2.1 percent compared with a 7.1 percent gain in hardlines. And the final week, when pre-Easter sales began last year, saw a precipitous drop in sales, several chains noted.
A reverse trend in April of comp hikes in the mid-to-high single digits was projected by a number of retailers, and many suggested looking at the combined March/April period for clearer trends.
“We think the two months together are going to look strong,” said Richard Baum, retail analyst at CS First Boston. “You clearly saw that those that are less dependent on apparel did better than those that are more dependent on apparel, with Sears doing better than Penney’s, Federated doing better than May and Wal-Mart outperforming Target.”
Analysts say a healthy job market and high consumer confidence should offset any worries about higher interest rates and oil prices, or the rocky stock market, to keep shoppers in the stores.
Driving April’s gains should be the seemingly unquenchable consumer’s appetite and some clear fashion trends, such as capri and crop pants; three-quarter length shorts, and an overall infusion of color, particularly brights, Baum said.
“You’re seeing a lot of interesting color out there,” he said.
Robert Buchanan, at A.G. Edwards, believes that a late Easter tends to help sales because it lengthens the Easter selling season and warmer weather drives spring items. “I think April is going to come in strong,” said Buchanan.
Even with the distortions, there were clear losers — Gap, May Co., J.C. Penney, Dillard’s, The Buckle and Paul Harris — as well as winners: Kohl’s, Talbots, Wal-Mart, Sears, Limited, and Pacific Sunwear.
Despite the herky-jerky stock market, luxury also fared well, with Neiman Marcus Group up 16.3 percent, led by Bergdorf Goodman, up 36.2 percent; Neiman Marcus Stores, 11.4 percent, and N.M. Direct, 23 percent. A NMG spokeswoman said the firm is benefiting from a shift away from better and bridge to fine apparel, which is also lifting sales of women’s shoes, fashion accessories and precious jewelry.
The Saks Fifth Avenue chain was up between 4 and 5 percent and above plan, but a weak performance by traditional department stores caused an overall 1.1 percent comp decline for Saks Inc. Bestsellers at Saks were women’s apparel, accessories, cosmetics, shoes, fashion and fine jewelry, home gifts, intimate apparel, coats and outerwear, while softness was seen in women’s moderate and better sportswear, day dresses and suits, juniors, and children’s.
Kohl’s said it believed its 6.8 percent comp gain was aided by an emphasis on “wear-now” spring merchandise.
“We feel we had a strong spring content in the stores,” said a spokeswoman. Trending above the average was men’s and women’s apparel and shoes while trailing categories were home, accessories and kid’s. Newly opened Kohl’s stores in former Caldor sites in the Northeast are thriving, with first-year store volumes expected to be in line with that of a typical mature store.
Another winner was Sears, which on Wednesday, as reported, said it had a better-than-expected 3.8 percent gain, and said first-quarter results would best Wall Street targets.
Wal-Mart led the discount pack with a 3.9 percent gain — at the top end of its plan — with top sellers consisting of swimwear, underwear, automotive, seasonal goods, electronics, foundations, and select apparel categories. Target and Kmart both blamed weakness in children’s apparel and Easter-basket items for their slight comp slides.
J.C. Penney cited double-digit declines in men’s, family footwear and children’s, with women’s apparel down in the high-single digits, and the only category gainer being women’s accessories, up in the low-single digits. May Co., down 4.3 percent, said sales decelerated during the final two weeks.
Among specialty stores, Talbots paced the pack with a whopping 18.7 percent hike.
“Due to strong regular-price selling, we expect to have significantly less markdown merchandise than last year as we finish out our mid-season sales in April,” said Arnold B. Zetcher, president and chief executive. Talbots predicted first-quarter earnings between 87 and 90 cents a share, above Wall Street’s estimates of about 80 cents and year-ago earnings of 62 cents.
Standouts at Talbots included a variety of T-shirts, five-pocket women’s cotton jeans, basic and microfiber twill pants, capris, and jumpers. In career, silk crepe and linen “performed very well,” along with silk twilled jackets.
Limited boasted a 4 percent comp gain, led by hikes of 15 percent at Express and 14 percent at Limited Stores. Woven pants and denim drove Express’s sales. Comps slid 4 percent at Lerner but rose 1 percent at Lane Bryant.
Pacific Sunwear said its 9.8 percent gain was fueled by a 9.6 percent gain at its core Pacific Sunwear stores and 15.1 percent at its d.e.m.o. chain. Juniors and accessories paced sales with double-digit gains, led by strength in sundresses, swimwear, and T-shirts, as well as color and strappy looks.
Ann Taylor said its 0.7 percent comp decline was in line with plans.
The chain highlighted strength in separates, particularly pants and blouses in refined fabrics; chunky sweaters, and colors and novelty items overall.
“Our clients continue to respond well to our spring fashion offering and our vibrant seasonal palette,” said J. Patrick Spainhour, chairman.
Nordstrom delivered a 5.8 percent gain, but analysts said it was clearance-driven as the chain makes room for more contemporary merchandise. Stronger gains were registered in shoes, men’s apparel, cosmetics, women’s designer apparel and women’s accessories, but women’s apparel sunk.
A major disappointment was the Gap, which on Wednesday posted an 11 percent drop, due to declines in the teens at domestic Gap and Old Navy.
Bebe said its 10.1 percent drop reflected scarce inventories in knits as well as the Easter shift, but noted good demand for leather, animal prints, key pants silhouettes and color. Paul Harris blamed its 17.9 percent plunge on career, and said it planned to shift more to casual, while Dress Barn, up 16 percent, said it benefited from a greater emphasis on casual.

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