Apr 7, 2011
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Retailers' March sales not as bleak as expected

Apr 7, 2011

April 7 - March was not as bad as expected for U.S. retailers, at least as far as initial sales reports show, suggesting that shoppers largely ignored higher gasoline prices and other concerns to treat themselves.

Teen apparel retailer Hot Topic

U.S. retailers overall are likely to show a drop in March same-store sales, hurt by Easter falling three weeks later than last year, which delays some spring clothing purchases.

Chilly weather and rising inflation were also expected to hurt discretionary purchases.

However, early reports from a variety of retailers such as Costco Wholesale Corp and Limited Brands Inc showed much stronger-than-expected results.

Others, including drugstore operator Walgreen Co and teen apparel retailers Hot Topic Inc, Zumiez Inc, Buckle and Wet Seal also reported better than-expected sales for the month.

"The retailers that have the right assortment are still doing well," said Tom Clarke, director of AlixPartners' global retail practice.

Analysts were expecting a tally of 25 major retailers to show a drop of 0.7 percent in sales at stores open at least a year, according to Thomson Reuters.

While unemployment remains high, it has edged down in recent months, giving some people more wiggle room to shop.

"This March I spent more than last March because I was searching for a job last March," said Jane Marcinkiewicz. A 37-year-old mother of two from New York's Harlem neighborhood, she works part-time at a department store.


This year's Easter is the latest since 1943, which means holiday promotions will last all spring long, noted National Retail Federation Chief Executive Officer Matthew Shay.

With Easter falling on April 24 this year, 20 days later than in 2010, the bulk of sales of spring clothing, candy and other goods were probably delayed until April.

At the same time, shoppers have already started to pay more for groceries and gasoline, reducing the amount left for other purchases.

"Now we're entering the period when retailers have to decide whether to increase prices or reduce gross margins," Clarke said. "That risk is now here."

Costco's sales at stores open at least a year jumped 13 percent, or 8 percent excluding the impact of selling gasoline at higher prices and stronger foreign currencies. Analysts had expected a 7.4 percent increase, according to Thomson Reuters.

The top warehouse club operator said inflation was "modest" in meat and produce, and similar to what it had seen in recent months in fresh food overall.

Figures from companies this week will not paint the full picture of the consumer economy as the retailers that still issue monthly figures account for only 10 percent of total U.S. retail sales, according to Customer Growth Partners President Craig Johnson.

Major retailers such as Wal-Mart Stores Inc, Home Depot Inc and many others do not give monthly tallies.

(Reporting by Jessica Wohl and Brad Dorfman in Chicago and Dhanya Skariachan and Phil Wahba in New York; Editing by Phil Berlowitz and Lisa Von Ahn)

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