Sales decline
Shoppers continue to be cautious with spending
Discount stores are still reporting better results than other retailers.
NEW YORK (AP) — March same-store sales fell for the sixth straight month as consumers continued to shop cautiously and stick mostly to necessities such as food, but there were some glimmers of stabilization in retailers’ reports Thursday.
The later Easter hurt some results — notably Wal-Mart Stores Inc. — but several retailers predicted strong April sales and boosted first-quarter guidance. Discounters continued to outperform other sectors while the luxury market remained weak as shoppers continued looking for deals.
Retailers have been slashing costs and cutting inventory in an effort to improve results amid weak consumer spending.
Consumer spending is closely watched by economists and analysts because it accounts for 70 percent of all U.S. economic activity. Any sign of stability could be a hint of a bottom to the recession.
The economy’s steep contraction in late 2008 was caused in large part by the 4.3 percent drop in consumer spending in the fourth quarter. That was the largest drop in more than 28 years.
While many retailers reported same-store sales declines, some boosted at least the low end of their quarterly guidance including TJX Cos., American Eagle Outfitters Inc., Hot Topic Inc., Aeropostale Inc., J.C. Penney Co. and others.
Amid the department stores, midtier players showed improvement while the luxury sector remained weak. Macy’s, J.C. Penney Co. and Kohl’s Corp. reported same-store sales drops that were smaller than analysts expected. However, luxury sellers Saks Inc. and Neiman Marcus reported steep drops.
Cincinnati-based Macy’s said same-store sales fell 9.2 percent in March, though analysts surveyed by Thomson Reuters expected sales to drop 9.3 percent. For the five weeks ending Saturday, Macy’s reported a 9.8 percent drop in total sales to $1.93 billion, from $2.14 billion a year ago.
According to a preliminary tally by the International Council of Shopping Centers, same-store sales fell 2.1 percent in March. But ICSC Chief Economist Michael Niemira said that includes a 3 percentage point decline related to the later Easter and calendar shift.
“Today’s numbers are the type that the tone from retailer’s comments is better than the reported performance,” Niemira said. “It’s really a mixed bag.”
Niemira added that because of Easter, a shift in the calendar and the plunge in gas prices, looking at March and April figures together will be a better indicator of any stabilization in consumer spending.
“On the surface, March is weaker than we’ve been seeing the last few months, but we know that’s not the underlying trend,” he said. “The tone and comments from retailers really reflect a better performance than reported, but the jury is still out on whether we really have stabilized.”
Same-store sales, or sales in stores open at least one year, are considered a key measure of a retailer’s health.
Discounters continued to report better results than most retailers, but there was some improvement in results for mall-based chains such as Gap Inc. and Limited Stores Inc. Though weak sales persisted, many retailers reported that foot traffic improved.