SALES at US retailers declined last month, trailing alreadyreduced estimates, as an earlier Easter shifted gift purchases into March and the coldest April in a decade curbed sales of lightweight clothing. Wal-Mart Stores, the world’s largest retailer, said sales fell 3.5%, trailing its forecast for a decline of as much as 2%. Sales at stores open at least a year also fell at Federated Department Stores and Gap. Easter was eight days earlier than in 2006, prompting some shoppers to make most holiday purchases in March. The coldest April in a decade and more than average amounts of rain and snow crimped sales of shorts, dresses and other spring clothing. “Easter took some sales from April into March,” Steven Baumgarten, an analyst at PNC Wealth Management in Philadelphia, said May 8. “You aren’t thinking about buying the new bathing suit when there’s an ice storm outside.”
The firm manages $54 billion, including shares of Wal-Mart and JC Penney Co. US April sales may post a “small dip,” which would be the first decline in four years, the International Council of Shopping Centers said May 8. Previously it had forecast unchanged April sales. Same-store sales are an industry benchmark used to measure the health of older stores. The ICSC, a New York-based trade group, tracks sales at about 60 chains. March sales climbed 5.9%, the biggest monthly gain since April 2006. Shares of Wal-Mart lost 43 cents to $47.50 as of 9.16 am in New York, Federated dropped 42 cents to $43.40 and Gap slipped 42 cents to $18.01.
Last month was the coldest April since 1997 in the US, the wettest in four years and the snowiest in more than 14 years, according to Weather Trends International, a Bethlehem, Pennsylvania-based firm. The Northeast and North Central states were especially hit by snow, the firm said. Retail spending may have also been hampered by higher gasoline prices. The average price of a gallon of unleaded gasoline rose to $3.05 for the week ended May 7, the highest since September 2005, the US energy department said. April same-store sales estimates from had already been lowered, according to Swampscott, Massachusetts-based Retail Metrics Inc., a research firm that provides analyst estimates.
Wal-Mart said cooler weather hurt demand. Sales this month and in the second quarter may rise 1% to 2%, the Bentonville, Arkansas-based company said on Thursday. Federated, the second-largest department store company, said sales at stores open at least a year declined 2.2%, missing analysts’ estimate for an increase of 1.2%. Chief executive officer Terry Lundgren said sales were disappointing at both its older stores and the former May Department Store stores it converted to the Macy’s name in September. The Cincinnati-based retailer said sales in May would be unchanged to down 2%. Sales slumped 16% at Gap, the largest US clothing retailer, missing analysts’ estimate for a drop of 7%, according to data compiled by Retail Metrics. April sales at JC Penney fell 4.7%. Analysts expected a loss of 0.9%, according to Retail Metrics.
The company said March and April sales were “distorted” by the shift of Easter into the March sales period. Limited Brands, the owner of Victoria’s Secret and Express, said sales fell 1 percent, trailing the estimate for a 1.2% gain. American Eagle Outfitters Inc., a teen- clothing retailer, said yesterday that April same-store sales fell 10 percent. Analysts estimated an increase of 1.4%. Sales at Seattle-based Nordstrom Inc. gained 3.1%, short of the analyst estimate of 4%. Neiman Marcus Group Inc said sales rose 1%. Shares of JC Penney, the thirdlargest department-store company, fell 71 cents to $77.50 and American Eagle declined 48 cents to $28.50. Limited shares added 60 cents to $28.61. The Standard & Poor’s 500 Retailing Index of 30 companies climbed 1.3% on Wednesday. It has risen 4.6% this year, compared with a 6.7% gain at the Standard & Poor’s 500 Index. “April 2007 is likely to go in the record books as a lousy month,” Mark Montagna, an analyst covering Gap and other apparel retailers at CL King & Associates in New York, wrote in a May 8 note.
Not all retailers trailed forecasts. Saks said sales jumped 12%, helped by sales of women’s apparel, handbags and shoes. Results exceeded the 6.8 estimate. Saks forecast “low-double digit” sales growth for the second quarter. Target Corp, the second-largest US discount chain, said April sales declined 6.1%, while analysts predicted a drop of 6.4%. The Minneapolis-based retailer originally forecast a decline of 2% to 4%. Target last month reduced its prediction, saying sales would be “much weaker” than it expected. Costco Wholesale Corp, the largest US warehouse club, said April same-store sales climbed 7%, exceeding the 6.2% estimate. US retailers are expected to report May sales on June 7. Sears Holdings Corp, the biggest US department-store retailer, doesn’t report monthly sales.— Bloomberg
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