Wall Street Journal
By Karen Talley
U.S. retailers showed continued momentum in April, posting strong sales with the aid of the Easter holiday, but some caution prevailed in the midst of uncertainties consumers face.
Comments from retailers about rising gasoline prices, still high unemployment and the need to pass along rising raw-materials costs cast a bit of a pall on the month.
The 25 retailers tracked by Thomson Reuters showed an 8.9% sales gain for April at stores open more than a year, also known as same-store sales. The results beat analysts' expectations for an 8.4% rise and were the best showing in a year. The figures, however, were erratic, with a number of high profile retailers missing expectations.
Target Corp. posted a 13.1% rise in April same-store sales, just beneath the 13.2% that analysts expected. The mass merchant said the results were somewhat below its own expectations as consumers were "very cautious" in their spending up until Easter.
Chief Executive Gregg Steinhafel added that customers "face increasing pressure on their household budgets due to higher energy costs and increasing prices of food, apparel and home merchandise."
Among department stores, J.C. Penney Co. reported a 6.4% rise in same-store sales, when 8.5% was expected. The retailer still raised its first-quarter guidance based on its overall performance during the period.
Kohl's Corp. said same-store sales increased 10.2%, below analysts' projections for 15.1%. Kohl's did say it sees first-quarter earnings towards the high end of its earlier projection.
Macy's Inc. posted a 10.8% rise in comparable-store sales, besting expectations for 8.1%.
Luxury retailers lost momentum, with Saks Inc. reporting a 5.8% rise, when 10.3% was expected. Saks said the shifting of a sales event had an impact on April sales. Nordstrom Inc. posted a 7.6% rise, shy of expectations for 8.1%.
Gap Inc. showed an 8% gain in same-store sales, but issued a disappointing earnings outlook on "significantly down" merchandise margins and announced the departure of a senior executive, the president of global design for its adults and body categories.
Among the stronger performers, warehouse club Costco Wholesale Corp. posted a 12% rise in April same-store sales, ahead of expectations for 8.9%, despite being closed on Easter.
Costco operates gasoline stations at its sites and said it was aided by rising fuel prices—which send drivers looking for cheaper gas. Stripping out gasoline, Costco same-store sales were up 6%.Foreign currencies also provided a boost.
Teen retailers enjoyed business from Easter breaks, with Hot Topic Inc. ending a two-year string of monthly declines by reporting an 11% jump in same-store sales and raising its full-year outlook. Zumiez Inc. also posted sales growth that exceeded analysts' expectations. The company said that while average prices rose, the amount of items bought fell, suggesting that consumers, although buying, are being cautious with their dollars.
Buckle Inc.'s same-store sales rose 14.5%, ahead of expectations for 12.5%
Limited Brands Inc. remained robust, posting a 20% rise in same-store sales, when 12.2% gain was expected. The operator of Victoria's Secret and Bath & Body Works also raised its first quarter guidance.
Regional department store chain Stage Stores Inc. posted a 15.1% gain in April comparable sales, when 13.8% was projected. But the company cut its first quarter and full-year view based on earlier weakness and troublesome trends that it sees. "Our first quarter sales were disadvantaged by February's storms and a disappointing Easter business," Chief Executive Andy Hall said. "While April sales benefited from the Easter calendar shift [to later in the month], rising gas prices made for a more cautious consumer."
There are also signs of trouble among retailers that do not report monthly same-store sales, including Sears Holdings Corp., which on Tuesday warned of a big first-quarter loss. Big Lots Inc. on Thursday posted a decline in first-quarter sales, with the closeout retailer's chief executive saying business softened in the back half of the period on what it believes were "significant weather challenges."
Big Five Sporting Goods Corp. cited lower customer traffic when posting weak first quarter earnings and giving a very soft outlook. "We believe many of our consumers reduced purchases of discretionary items in response to the challenging economic environment, characterized by rising gas prices and high unemployment," Chief Executive Steven Miller said in a statement.
Gasoline prices are up more than 30% from a year ago and the pinch is being felt. The number of U.S. consumers reporting that gas prices are having a "significant impact" on spending and budgeting decisions rose to 43%, up 12 percentage points from a year earlier, to the highest percentage since September 2008, according to a recent Stifel Nicolaus survey.
April Same-Store Sales
Company name
Category
Same-store sales change
Overall sales change
Overall sales (millions)
Comments
BJ's
Discount
4.1%
12.2%
$777.0
Excluding gas, traffic was up 3 from a year earlier. Departments with the strongest sales increases compared to last year included food, small appliances and electronics, while apparel, cigarettes, re-recorded video and televisions were weaker. (Same-store sales change excludes gasoline.)
Buckle
Apparel
14.5%
18.7%
$69.4
The timing of the Easter holiday was seen boosting sales in April.
Costco
Discount
6.0%
17.0%
$6,800.0
Increasing gas prices boosted overall sales in the month, and the timing shift of Easter into April from March negatively affected sales due to stores being closed for the holiday. (Same-store sales change is for U.S. and excludes gasoline.)
Gap
Apparel
8.0%
10.0%
$1,150.0
The company ousted one of its top designers, Patrick Robinson, amid disappointing earnings projections. The high-end Banana Republic chain reported a 11 sales increase in the U.S., while sales at the discount Old Navy stores and the flagship Gap brand, rose 14 and 2, respectively.
Hot Topic
Apparel
10.5%
9.2%
$46.5
Hot Topic reported its first monthly increase in two years.
J.C. Penney
Department
6.4%
3.4%
$1,261.0
The retailer raised its first-quarter earnings outlook, but said prices were flat and shoppers bought less each trip.
Kohl's
Discount
10.2%
12.1%
$1,278.0
Accessories, home and children's outperformed the company average for the month. The Southeast and West regions reported the strongest comparable sales for the month.
Limited Brands
Apparel
20.0%
17.0%
$683.2
The company raised its earnings outlook. The Victoria's Secret brand drove the company's same-store sales increase, rising 25, and Bath & Body Works notched a 16 jump. La Senza sales fell 1.
Macy's
Department
10.8%
10.9%
$1,924.0
The company noted particular strength in southern climates in the first quarter, burnishing hopes that it's warmer weather designs will be popular as the spring arrives in northern climates.
Neiman Marcus
Luxury
8.3%
8.5%
$330.0
Sales were strongest in the southeast and northeast. The merchandise categories that performed best included women's contemporary sportswear and evening apparel, designer handbags, precious jewelry and men's.
Nordstrom
Luxury
7.6%
14.2%
$726.0
Nordstrom's full-line stores notched an 9.3 increase in sales, while discount rack stores saw a just a 2.7 jump.
Ross Stores
Apparel
10.0%
14.0%
$651.0
Dresses and shoes were the strongest categories for sales, while Texas and Florida were the markets with the best performance.
Saks
Luxury
5.8%
4.2%
$257.3
The company said the strongest categories were women's contemporary and designer evening apparel, men's apparel, women's and men's shoes, handbags, and fragrance.
Stage Stores
Department
15.1%
16.8%
$119.0
"The Easter shift was a benefit as sales were up in accessories, children's, cosmetics, footwear, junior's, men's, young men's and plus sizes. Geographically, the Midwest, South Central, Southeast and Southwest regions performed best."
