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Retailers have ho-hum start to spring, see better April

A sign is pictured outside a Costco Wholesale store in Los Angeles, California March 6, 2013. REUTERS/Mario Anzuoni
A sign is pictured outside a Costco Wholesale store in Los Angeles, California March 6, 2013. REUTERS/Mario Anzuoni

By Phil Wahba and Dhanya Skariachan

(Reuters) - Cold weather and lingering concerns about the job market dampened shoppers' enthusiasm and hurt early spring selling at several retailers in March, but some executives and analysts said they expected business to improve slightly in April.

Several top retailers, including Costco Wholesale Corp and T.J. Maxx parent TJX Cos Inc , reported weaker-than-expected March sales.

The labor market recovery showed signs of losing momentum in March as employers hired at the weakest pace in nine months, raising concerns about the impact on consumer spending.

"Anyone who thinks the consumer will come swinging out of the gate is fooling themselves," said Alison Jatlow Levy, retail strategist at consulting firm Kurt Salmon.

Many parts of the country also experienced the worst of winter in February and March, later than normal, so shoppers held off on purchases of spring merchandise.

Costco's sales at stores open at least a year were up 4 percent, less than the 5.2 percent jump analysts expected.

TJX reported a 2 percent decline in March same-store sales, deeper than the 1 percent drop analysts were projecting. But the company said business improved as the weather warmed up, and Chief Executive Officer Carol Meyrowitz said April "was off to a good start."

International Council of Shopping Centers Chief Economist Michael Niemira and others also expect things to get better for retailers in April as shoppers release some pent-up demand and lower gasoline prices add to their discretionary spending power.

The ICSC forecasts a 2 percent to 3 percent increase in April same-store sales, and a 3 percent to 4 percent gain excluding drugstores.

The arrival of delayed tax refunds for some customers should also help boost April sales, said Ken Perkins, president of consulting firm Retail Metrics.

The S&P 500 Retail Index <.SPXRT>, which had fallen earlier on Thursday, rose as much as 1.8 percent to touch a one-year high, outpacing the broad S&P 500's <.SPX> 0.6 percent gain.


Analysts expect 13 top U.S. retailers, including TJX Cos and Gap Inc , to post a 1.8 percent rise in same-store sales for March, according to Thomson Reuters, down from an increase of 2.9 percent a year earlier.

Gap will report its results after the markets close.

Excluding drugstore chains Walgreen Co and Rite Aid Corp , whose results are heavily skewed by prescriptions sales, Wall Street expects a gain of 2.2 percent, down from a rise of 7.1 percent last year.

There were some bright spots in the month, the economy and weather notwithstanding.

Victoria's Secret parent L Brands Inc reported higher-than-expected sales at all of its chains. Companywide, same-store sales rose 3 percent, while Wall Street expected them to be flat, according to Thomson Reuters data. The retailer's shares rose more than 5 percent.

Low-priced retailer Ross Stores Inc , which has less exposure to the colder regions of North American than larger rival TJX, posted an unexpected gain in same-store sales. It said it now expected its quarterly profit to come in slightly above its earlier forecast of $1.00 to $1.04 per share, and its stock rose 7.5 percent.

Zumiez Inc and Buckle Inc , which cater to younger shoppers who are particularly exposed to the vagaries of the economy, both reported stronger-than-expected numbers. American Apparel Inc said its March same-store sales were up 8 percent.


Many retailers were hampered by the cold start to March, prompting many shoppers to put off buying warmer-weather clothing.

Also, Easter fell on March 31 this year, compared with April 8 last year. With the wintry weather leading up to the holiday, shoppers may have held off on buying clothes for spring.

Low-priced specialty clothing chain Cato Corp , regional department store operator Stein Mart Inc and discount general merchandise retailer Fred's Inc all blamed weather and Easter's timing for steeper-than-expected drops in March same-store sales.

Last week, Rite Aid said its same-store sales fell 2 percent, but sales of general merchandise, a closer proxy to consumer discretionary spending, rose 3.8 percent.

Larger rival Walgreen reported a modest 0.7 percent same-store sales gain, with a better showing for general merchandise, which beat expectations.

(Reporting by Phil Wahba and Dhanya Skariachan in New York, and Jessica Wohl in Chicago; Editing by Jeffrey Benkoe and Lisa Von Ahn)