APRIL SALES DEPRESSED BY WEATHER

Byline: Thomas J. Ryan

NEW YORK — Chilly spring weather led to dismal April sales for many big retailers, particularly in the Northeast, triggering a slew of warnings that they will fall short of first-quarter estimates.
Among those putting up the red flag were Kmart, Ames, Bon-Ton, Claire’s, The Buckle, Goody’s, Sunglass Hut and One Price Clothing. Gap Inc. late Thursday said high markdowns at Old Navy and Gap Stores would cause it to fall a penny or two off Wall Street estimates.
Cold, rainy weather in the East and Midwest hindered apparel sales, and many national chains pointed to better performances in the West and South. Bon-Ton, Dress Barn and Deb Shops suffered same-store drops, while chains in the west like Gottschalks and Ross Stores scored double-digit gains.
On the other hand, some specialty chains thrived, including Talbots, Limited, Victoria’s Secret, Chico’s F.A.S., Brauns, Cato and Charming Shoppes.
Prudential Securities’ Wayne Hood said weather was an obvious factor hurting sales in the Northeast, but he added that a deceleration in leading indicators such as real income growth, the unemployment rate and consumer confidence, may be pointing to an impending slowdown in consumer spending. How dramatically consumer spending will drop is still in question, according to several analysts, since reading April’s underlying sales trends was made difficult by the cool weather, as well as the rocky stock market and the Easter shift.
“May will be an important indicator because hopefully it won’t be a month impacted by weather,” Hood said.
PaineWebber’s Jeff Edelman called the industry performance “mixed” and said that sales momentum continued at Target, Wal-Mart, Kohl’s and Federated Department Stores. He expects that after a year of “unusually strong consumer spending” there will be “some slowing” in the second half due to further interest rate hikes.
Last month’s weak apparel performance had some analysts wondering if fashion trends had gone stale. J.P. Morgan’s Shari Schwartzman Eberts said many department stores believed poor fashion content contributed to weak women’s sales, including goods seen as “too bright and too tight for the department store customer.”
However, color was cited as a big winner for several specialty chains, including Express, Banana Republic, Ann Taylor and Talbots.
Talbots continued to sizzle with a 14.7 percent same-store gain and raised its earnings guidance for the second month in a row. It now expects to make between $1.02 and $1.04 a share, up from 62 cents a year ago and from Wall Street’s consensus estimate of 90 cents.
“Our robust sales trends continued in April, driven by much better than anticipated regular-price selling of our classic merchandise,” said Arnold Zetcher, Talbots chief executive.
Limited’s 14 percent same-store increase was paced by a gain of 22 percent at Express and 11 percent at Limited Stores. Limited said sales were “driven by strong fashion, specifically new colors, fabrics and silhouettes.”
Ann Taylor’s comps dipped 1.2 percent, but hot items were color overall and pantsuits, tops and separates. Silks and silk dupioni were top fabrics.
The stock market turmoil hasn’t crimped luxury spending. Neiman Marcus Group reported comp gains of 10.4 percent at Neiman Marcus Stores, 15.7 percent at Bergdorf Goodman and 16.2 percent at NM Direct. Gains over 15 percent were achieved in fine apparel, women’s shoes, leather and fashion accessories, men’s sportswear and shoes.
Saks Fifth Avenue achieved a mid-single-digit gain, but Saks Inc. department store group suffered a slight decline. Bestsellers at Saks were Gold Range women’s apparel, children’s, accessories, cosmetics, shoes, fashion and fine jewelry while laggards were designer apparel, women’s moderate and better sportswear, juniors and special sizes.
Kohl’s, up 8.4 percent, was a clear winner, citing apparel strength. “Spring merchandise continues to sell very well,” said Larry Montgomery, Kohl’s ceo and vice chairman.
Federated’s chairman and ceo James M. Zimmerman said he was disappointed with its 5.2 percent April comp gain, noting that apparel sales were “particularly sluggish early in the month.” Sales did pick up as temperatures rose later in the month.
May Co. was up below plan, at 1.8 percent, with women’s ready-to-wear particularly weak.
Sears Roebuck chairman and chief executive Arthur Martinez reported that electronics, footwear, and kid’s drove Sears’ 2.4 percent comp gain.
“Apparel sales increased for the month, including a solid increase in women’s ready-to-wear, although total apparel did not meet our expectations due to cold temperatures in many parts of the country,” he said.
Target banged out a 14.7 percent gain with the best performances by Easter-oriented items such as consumables, toys and children’s. Women’s apparel and sporting goods lagged.
Wal-Mart said strength in other categories overcompensated apparel weakness for a 11.6 percent gain at its discount stores.
Apparel remained weak at TJX.
Kmart expects first-quarter earnings to drop to 6 cents a share from 11 cents due to poor apparel sales. “While we held the line on expenses during the first quarter, we simply were not as promotional as we needed to be,” said Floyd Hall, chairman and ceo, in a statement.