May 8, 2014
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US retailers benefit from warmer April as sales bounce back

May 8, 2014

Spring was in full swing for some U.S. retailers, with shoppers spending again in April after the weather warmed up. A number of large U.S. retailers, including Costco Wholesale Corp and Victoria's Secret parent L Brands Inc, reported April comparable sales above expectations, helped in part by a later Easter that pushed sales from March, and the end of a harsh winter that had kept many shoppers at home.

A number of large U.S. retailers reported April comparable sales above expectations. | Source:Pixel Formula

A group of nine retailers - which does not include giants like Wal-Mart Stores Inc, Target Corp and Best Buy Co - reported a 5.6 percent increase in April comparable sales, better than the 4.1 percent rise analysts expected, according to Thomson Reuters' same-store sales index. "The April performance was strong and suggested that pent-up demand helped," said Michael Niemira, chief economist at the International Council of Shopping Centers.

Clothing stores Gap Inc and American Apparel Inc will report sales results after U.S. markets close.

There were hopeful signs for retailers after months of heavy discounting that slammed sales and profit margins in winter.

L Brands, whose shares rose 4.5 percent, raised its profit forecast and said it had been able to scale back promotions. Its comparable sales rose 8 percent.

Costco reported a 5 percent increase, better than the 3.2 percent analysts projected, and its shares rose 2 percent. Drugstore operators Walgreen Co and Rite Aid Corp reported better than expected sales, helped by gains in general merchandise.

The S&P Retail Index rose 0.7 percent. Despite the strong showing, some analysts said there was still reason for caution. "You can't put too much credence into these numbers when you have a big bounce from delayed purchases," said Craig Johnson, president of consulting firm Customer Growth Partners.

Johnson warned against reading too much into the improving unemployment numbers, given the slow growth in low-wage jobs and the rise in the number of people dropping out of the workforce.

Several other retailers reported large jumps in April results, reflecting shoppers' continuing appetite for bargains.

Discount apparel retail Stein Mart Inc said comparable sales rose 8.9 percent, while rival Cato Corp reported an 18 percent jump and raised its profit forecast.

Youth retailers The Buckle Inc and Zumiez Inc also reported better than expected April sales.

All four stocks were higher in morning trading.

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